Libertarian Tipping: Can a simple note make tips tax free?

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DALLAS — Nobody is a big fan of paying taxes, but is there an easy loophole to help waiters and waitresses get out of some of theirs?

Yeah, you may have seen a meme going around on Facebook about Libertarian Tipping. Just leave the tip line blank, leave some cash, and a note that says this is a gift and not taxable!

But is it really that easy? We went to a tax expert to find out.

“The concept is really philanthropic,” said Stephen J. Schlichting of the Schlichting Group, “But from the perception of the IRS, it’s income.”

So, like any gift you could say “it’s the thought that counts,” only this gift is still, by the IRS’s standards, taxable. Although it’s still an unclear world even for experts.

“There’s a gray area, because cash tips, do they go in the bank, do they not?" Schlichting said. "In the scheme of things the IRS isn’t worried about a dollar here and a dollar there. It’s just when they look at a return and it doesn’t make sense.”

Yeah, just make sure you stay pretty close to the mark on those tips and you should stay audit-free. But if 2016 Libertarian Presidential candidate Gary Johnson swings by your restaurant and drops a big money tip that he calls a gift, you still have to report it.

“You know the black and white of it is tips and the way it is on the IRS website is you claim it as income,” said Schlichting.

So yeah, not a huge surprise, but a note on a receipt from a friendly Libertarian isn’t enough to get around those pesky tax laws.

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