A photo showing the “Libertarian Way To Tip” went viral this week, and it’s great for anyone who thinks taxation is theft.
The image below was posted to Reddit after a customer wrote $0.00 on the tip line along with the message “Taxation is theft.” The customer was incredibly pleased with their server, and left a pile of cash that was well over 20% of the bill.
The customer wanted to make one thing clear, the pile of cash was not a “tip.”
A note left with the cash reads, “This is not a tip. This is a personal gift and not subject to federal or state income taxes.”
Many citizens are unaware that servers and waitstaff are required to report their tips as income when filing their taxes. Almost any cash that goes into your wallet is supposed to be reported to the IRS as taxable income, except for personal gifts. In 2017 an individual can receive a tax free gift up to $14,000 per year. The donee can’t be taxed for this money because it is a portion of the donor’s taxable income.
So what is considered a gift? We’re glad you asked. According to the IRS, a gift is “any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.”
This trick has quickly been named the “Libertarian Way To Tip” after the Libertarian view on taxation.
What do you think about this trick? Do you think the note will hold water in an audit?