Video Topic:

IRS Form 8846 - FICA Tip Credit - Form 8846 Instructions - Calculating FICA Tip Credit

Welcome back to the HoustonTax channel!

In this video, we’re uncovering the secrets behind IRS Form 8846, the FICA Tip Credit.

Whether you're a restaurant owner or run a business where tipping is common, this credit can save you big bucks on your tax bill!

But before we start the video subscribe to our YouTube channel HoustonTax and press the bell icon for the latest updates.

So, let’s get started!

First, what exactly is the FICA Tip Credit?

It’s a tax credit that allows eligible employers to get back some of the employer Social Security and Medicare taxes they pay on employee tips.
If your employees receive tips, this is a credit you do not want to miss out on!

Now, to claim this credit, you need to file IRS Form 8846.

It’s like your golden ticket to reducing your tax liability! But don’t worry, we’re here to break it down step-by-step.

Here’s how it works.

Form 8846 has two main parts:

Part 1 – Calculating the Credit: This is where you calculate the total Social Security and Medicare taxes paid on employee tips.
Remember, only tips that exceed the federal minimum wage are eligible. So, grab your payroll records, and let's do some math!

Part 2 – Claiming the Credit: Once you’ve calculated the eligible amount, simply transfer it to your business tax return, either Form 3800 or Form 1040 if you’re a sole proprietor.

But how do you calculate this credit correctly?

Let’s break it down:

Step 1: Calculate the total tips received by your employees.
Step 2: Determine the tips that exceed the federal minimum wage.
Step 3: Multiply the excess tips by the FICA tax rate (7.65%).

For more details watch the complete video. If you want to read our blog on IRS Form 8846 then click the link below:

[ Ссылка ]

For IRS Tax preparation help call HoustonTax at (281) 404-0443 or email us at info@houston.tax



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