[the_mitsuhiko]

TIL. They are tax excempt where I live. However it looks like in that case it's even less of an issue because seems like the employer is required to report this for calculating medicare contributions anyways if I understand this correctly.

[URSpider94]

If you live in the USA, then they are not tax exempt. They may be exempt from state income tax, but not Federal. All income, whether reported or not, whether cash or not, even barter or in-kind income, is taxable.

That said, you have to make a personal decision on what level is worth tracking, and the IRS has to decide how aggressively it wants to audit.

[aianus]

It would be silly IMO for the taxman to officially discriminate against (poorer!) dishwashers vs. waiters in the same restaurant.