FICA TIP CREDIT CALCULATOR · RUNS IN YOUR BROWSER · NOTHING UPLOADED

How much employer FICA tip credit can your restaurant or salon claim?

Paste one line per employee: cash wage per hour, hours worked and tips reported for the year. It works out the Section 45B credit for each person, the total for Form 8846, what the credit is worth after the lost deduction, and what the same credit may be worth for earlier years you did not claim.

Planning arithmetic on numbers you type in. Not tax advice.

1. Your tipped employees

2. Rates and your tax position

Questions people ask

Who can claim the FICA tip credit?

Employers who pay Social Security and Medicare tax on tips their employees receive in a food or beverage business where tipping is customary, including delivery and takeout, and, for tips received after 2024, in beauty-service businesses such as hair, nail, esthetics and barbering. It is claimed on IRS Form 8846. Check the current Form 8846 instructions for who qualifies.

How is the credit worked out?

It is the employer's half of FICA, 7.65% (6.2% Social Security plus 1.45% Medicare), on the tips that are more than needed to bring an employee's cash wage up to $5.15 an hour. That $5.15 is the federal minimum wage of 1 January 2007 and does not change. Tips above the Social Security wage base earn only the 1.45%.

Why does my credit shrink for employees on $2.13 an hour?

The first $3.02 of tips each hour is treated as making up the wage to $5.15, so it earns no credit. An employee paid at least $5.15 in cash wages has every tip dollar counted.

Is the credit worth the full amount?

Not quite. You cannot also deduct the FICA the credit covers, so a profitable business keeps the credit minus the tax on the deduction it loses. The tool shows both figures. The credit is also part of the general business credit, which has income-tax limits and carryover rules.

Can I claim it for past years?

Often yes, through an amended return within the normal refund period, which is generally three years from filing. Many restaurants and salons never claimed it. The tool multiplies this year's figure by the number of prior years you enter as a rough guide only.

Is this tax advice?

No. It is arithmetic on numbers you type in. It does not know your filing status, entity type, credit limits, state rules or which tips were properly reported. Have a CPA review the figures before you file Form 8846 or an amended return.

Not decided

Whether your business qualifies, whether each employee's tips were properly reported and had FICA paid, service charges (which are wages, not tips), the general business credit limit and carryovers, the changing Social Security wage base by year, partial-year and multi-employer wages, state rules, and whether an amended return is worth filing. The defaults are placeholders, not your payroll: replace each with your own records and the current year's Form 8846 instructions.

Related tools: the restaurant tip pool calculator, the tip pool compliance calculator and the restaurant labor cost analyzer.