Glossary
50 terms every tipped & gig worker should know.
From "tip credit" to "Schedule SE" to "80/20 rule" — plain-English definitions for the tax, tipping, gig, and labor-law vocabulary that affects your paycheck. Each entry cross-links to related terms and to the calculators that put the math in your pocket.
A
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ABC Testgig
A worker classification test used by many states — to be a contractor, a worker must meet ALL three prongs: A (free from control), B (outside usual business), C (engaged in independent trade).
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Acceptance Rategig
The percentage of offered gigs (rides, deliveries) a driver accepts — tracked by platforms and sometimes tied to perks, bonuses, or platform standing.
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Active Hoursgig
For rideshare drivers, the time spent logged into the app and either available, en route, or with a passenger — affects insurance coverage, taxes, and (in some states) wage calculations.
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Actual Expense Methodgig
An alternative to the standard mileage rate where you deduct the actual costs of operating your vehicle, multiplied by your business-use percentage.
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Allocated Tipstipping
Tip income an employer assigns to a worker (showing in W-2 Box 8) when total reported tips at the establishment fall below 8% of gross sales.
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Auto-Gratuitytipping
An automatic tip-like charge added to a bill (often for large parties) — IRS treats it as a service charge / wages, not a tip.
B
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Back of House (BOH)restaurant
The kitchen and behind-the-scenes operations of a restaurant — cooks, dishwashers, prep, expo, and kitchen management.
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Business-Use Percentagegig
The share of total vehicle (or asset) use that's for business — applied to actual expenses to compute the deductible portion.
C
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Cash Tiptipping
A tip paid in physical currency — still 100% taxable, still reportable to your employer, and still tracked in tip pools and tip-outs.
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Comp / Voidrestaurant
Comp = a meal or drink the restaurant gives away (no charge to the guest); void = a transaction removed from the books before close.
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Credit Card Tiptipping
A tip paid through a credit/debit card or app — automatically tracked by the POS, paid out either nightly or with each paycheck.
D
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Department of Labor (DOL)legal
The federal agency that enforces wage and hour law (FLSA), including tip credit rules, tip pool legality, and worker classification.
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Direct Wage (Cash Wage)tipping
The hourly wage an employer pays a tipped worker before tips — federally $2.13/hr at the minimum, often higher by state law.
F
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Fair Labor Standards Act (FLSA)legal
The 1938 federal law establishing minimum wage, overtime, child labor, and tip-credit rules — enforced by the Department of Labor.
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FICAtax
The combined 7.65% payroll tax (6.2% Social Security + 1.45% Medicare) that funds federal retirement and health programs. Employers match it.
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Form 1040tax
The main U.S. individual income tax return — the form that consolidates W-2 wages, Schedule C net profit, SE tax, withholding, and your final refund or balance due.
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Form 1099-Ktax
The IRS form payment processors send when they've handled your card or app transactions above a reporting threshold.
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Form 1099-NECtax
The IRS form a business sends you when it pays you $600 or more in a year as a non-employee — typical for rideshare, delivery, and freelance work.
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Form 4137tax
The IRS form you use to report and pay Social Security/Medicare tax on tip income that wasn't reported to your employer.
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Form W-2tax
The IRS form your employer sends each January showing your wages, reported tips, and the federal/state/FICA tax withheld for the year.
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Front of House (FOH)restaurant
The customer-facing side of a restaurant — servers, bartenders, hosts, bussers, runners, and management visible to guests.
I
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Independent Contractor (1099)gig
A worker classified as self-employed rather than a W-2 employee — responsible for their own taxes, no employer-paid benefits, but eligible for business deductions.
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Itemized Deductiontax
Listing specific deductions (state/local taxes, mortgage interest, charity, medical) on Schedule A instead of taking the flat standard deduction.
M
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Mileage Deductiongig
A federal tax deduction self-employed workers take for business use of a personal vehicle — calculated by the standard mileage rate OR the actual expense method.
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Mileage Loggig
A contemporaneous record of business miles driven — required by the IRS to support any mileage deduction, whether standard rate or actual expense.
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Misclassificationgig
A business treating a worker as a 1099 independent contractor when they should be a W-2 employee — illegal, and a growing enforcement focus.
R
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Reported Tipstipping
Tip income you formally report to your employer (via daily tip sheet or IRS Form 4070) — the basis for FICA withholding and Box 7 of your W-2.
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Runner (Food Runner)restaurant
A support FOH role that delivers plated food from the kitchen pass to the table — typically tipped out by servers.
S
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Schedule Ctax
The IRS form sole proprietors and independent contractors use to report business income and expenses — where rideshare, delivery, and freelance income gets reconciled.
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Schedule SEtax
The IRS form where you calculate self-employment tax on your Schedule C net profit — the 15.3% you owe for Social Security and Medicare as a 1099 worker.
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Section (Station)restaurant
A defined group of tables assigned to one server for a shift — typically 4–6 tables, sized to the server's experience and the restaurant's pace.
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Self-Employment Tax (SE Tax)tax
The 15.3% Social Security + Medicare tax that self-employed workers pay on their net business income — both the employee and employer halves of FICA.
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Service Chargetipping
A non-voluntary fee added to a customer's bill by the business — legally treated as wages, not tips, even if the business gives some or all of it to staff.
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Side Work (Sidework)restaurant
Non-tipped duties tipped workers perform during a shift — rolling silverware, refilling stations, cleaning, prep work — regulated by the 80/20 rule.
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Standard Deductiontax
A flat dollar amount you subtract from your gross income before computing federal income tax — taken by ~88% of filers in lieu of itemizing.
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Standard Mileage Rategig
The IRS-published per-mile rate ($0.70 for 2026) self-employed workers use to deduct vehicle costs without itemizing actual expenses.
T
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Tax Brackettax
A range of taxable income subject to a specific federal income tax rate — the U.S. uses seven brackets from 10% to 37% in 2026.
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Tiptipping
A voluntary payment from a customer to a service worker on top of the bill — taxable income whether in cash or on a card.
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Tip Credittipping
A federal labor rule that lets employers pay tipped workers as little as $2.13/hr in direct wages if their tips bring total earnings to at least the full minimum wage of $7.25/hr.
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Tip Pooltipping
A system where tipped workers contribute some or all of their tips into a shared pot that gets redistributed by a formula — legal under FLSA with strict conditions.
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Tip-Outtipping
The share of tips a server pays to support staff (bartender, busser, runner, host) at the end of a shift — distinct from a tip pool.
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Tipped Employeetipping
Under federal law, any employee who customarily and regularly receives more than $30/month in tips — the threshold for tip credit eligibility.
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Tipped Minimum Wagetipping
The minimum hourly direct wage that an employer must pay a tipped worker — federally $2.13, varies by state from $2.13 to full state minimum wage.
W
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Wage Theftlegal
Any unlawful withholding of pay owed to a worker — including unpaid tips, off-the-clock work, illegal deductions, misclassification, or sub-minimum wages.
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Withholding / Form W-4tax
The amount your employer holds back from each paycheck for federal income tax — controlled by the W-4 you submit when starting a job.