Tax free tipping - a grassroots anti-tax movement
A lot of foodies leave tips in cash for different reasons. Some do it so that their server gets the tip directly without having to worry about the store owner not giving over all the credit card tips. Some do it because of the credit card fees. Some even do it to leave it to the server whether they want to report it as income on their taxes.
But there is a new trend similar to the "illegal tax evasion" scheme that's really just "legal tax avoidance". If you're unclear of the difference, evasion is illegal while the IRS has rules for avoiding taxes legally, like with deductions.
One legal way to not pay taxes on tips is not to tip at all, but to show your server a little extra appreciation with a gift. According to the US tax code, tips are taxable, but gifts up to a certain amount are not.
These gifts usually come with a handwritten note, or even a friendly business card, informing the recipient that the cash received is a gift and not a tip. It's up to them to report it correctly on their taxes.
It seems we can't go a single day without hearing about how people earning minimum wage can't afford to live, but the government is still taking the money they've earned. Why not let them keep more of it when they are already struggling? Tax free tips are a great way to help people avoid paying taxes, giving them a little bit better quality of life with very little effort. It also reduces government revenue, and therefore government waste.
- Free Market Capitalism in Uganda
- Where can I learn more about avoiding taxes?
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- Randall Lord imprisoned for breaking a law that doesn't exist.
- There is no law requiring you to pay taxes