Hmmm...Well she is happy now until the Marxist run IRS comes knocking.
She received two payments
A taxable tip and a non taxable scholar ship.
Dang right! Don’t report that, just like the obomacare people say!
Nope, those crafty Christian males have them beat pretty good. The $5K isn't income. It's a gift, especially since it's written directly to the college. That amount isn't taxable to her, or anybody. And I doubt the $1K written directly to her will get her into a bracket where she'll even have to file, on a waitress's wagesalthough, with her energy, she may surprise me.
And splitting the $100 with other employees? That will really get the IRS gnashing its teeth in frustration. Her only income from that is what she kept.
That girl sounds like an angel.
It could be argued that this was a gift, not a tip. And the check was made out to the school. Never passes through her hand. Again, a gift.
Tell the IRS to screw.
Gifts under $13,000 are tax-free; also if the check was made out to the school instead of her it has no tax implication at all.
I'm neither a CPA or a tax lawyer, but I think gifts are non-taxable.