“Hey big spender! Bruce Willis treats waitress to a whopping 800 euro (roughly $900) tip after dining on filet mignon, lobster and gnocchi during Berlin getaway with Emma.”

That was the headline published on Mail on Line May 12, 2015. The total bill was not disclosed.

Typing “tipping guides” in Google search will result in no less than 35 pages of various websites on the topic of tips and tipping etiquette. Wikipedia defines “gratuity (also called a tip) as a sum of money customarily tendered, in addition to the basic price, to certain service sector workers for a service performed or anticipated.”

Tipping and the amount of a tip varies by location and circumstances. Traditionally, tipping is not part of the culture in China and Japan. In fact the people of these two countries see tipping as insulting.

The United States and Canada share similar tipping practices. A typical trip could result in a substantial amount of tips, starting with the bellman, possibly the concierge, a taxi driver, the maître d’ at a restaurant, the waiter, the restroom attendant and the hotel housekeeper when you leave. It all adds up.

Servers work in the United States with the expectation of receiving tips. Tips are considered income and are treated as earned wages except in the months when tip income is under $20. At least 40% of tips received by waiters are not reported, according to the Internal Revenue Service.

The IRS case on the Fior D’Italia in San Francisco computed the under-reporting of tip income by the employees of $156,545 in 1991 and $147,529 in 1992. The average tips ranged from 14.4% to 14.29%.

Under-reporting of tip income is a big tax nightmare. The employer share of FICA and Medicare taxes on under-reported tip income by the employees is owed by the employer. The employees may also be subject to audit for underreporting of income after discovery of under-reported tips at an establishment.

Tipping is customary, not mandatory. How much and if you tip is totally discretionary. It all depends on your personal view on tipping. Are you tipping because you received good service, out of guilt or just feel obligated?

On the flip side, if you receive tips, you’re supposed to report them as income for tax purposes. Tips are supposed to supplement your wages. For more information on reporting tip income go to the IRS website.