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Form 8846 – Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips 2022

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Form 8846: Get a Credit for Employer Social Security and Medicare Taxes

Form 8846: Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips is designed to help businesses, especially in the service industry, where employees receive tips. It allows employers to claim credit for Social Security and Medicare taxes paid on those tips, thereby reducing their tax liability. This can provide significant savings to businesses and is an important part of navigating your tax obligations effectively.
form 8846 get a credit for employer social security and medicare taxes template
If you’re a business owner or employer looking to reduce your tax burden, you must know that the Internal Revenue Service (IRS) offers tax credits to businesses whose employees receive tips.
Form 8846 is your key to accessing these credits. Download our free editable Form 8846 template on Fill now.

What is Form 8846 and How Does It Work?

Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips, is used to calculate the tax credit available to employers who pay Social Security and Medicare taxes on certain employee tips.

This document serves as a tool for businesses to claim employer credit for incurred employer social security and Medicare taxes. By utilizing this form, you can accurately claim all available credits and maximize your savings.

Form 8846 also allows you to easily report your total credit and claim any excess credits in future quarters, giving you even greater flexibility and control over your finances.

To calculate an employer tax credit, you must first compute the number of creditable tips. The creditable tip calculation has the objective of reducing the amount of the tip resulting from the difference in hourly pay and Federal minimum wage from credit eligibility. The total tax rate in 2022 for 401Ks is 14.3%. Approximately 75% of the bill goes to workers. This includes 6% Social Security taxes and 0.5% Medicare.

Understanding the Use Cases of Form 8846

Form 8846 is applicable to a variety of industries, particularly the food and beverage industry. Whether you are an owner of beverage establishments, a hotel manager, or any other business that relies on received tips from customers, Form 8846 can help you claim the credits you deserve.

Other scenarios where Form 8846 may be useful include:

  • Employers who provide paid leave to employees affected by COVID-19
  • Businesses that operate in empowerment zones or rural renewal counties
  • Employers that hire individuals from targeted groups

To determine the credit eligibility, employers first determine what amounts are called creditable tips. Tipped employees typically get paid less than federal minimum wages. The creditable tips calculation attempts to eliminate from credit eligibility those tips that constitute a difference between tipped workers’ actual wages and federal minimum hour earnings that were effective at the time.

For tip income, the payment process must follow conditions such as:

  • You cannot demand customers to give employees tips
  • You must explain to the customer the total amount without any restrictions
  • The creditable tip amount cannot be under the employee’s policy
  • The customer has the right to choose who will receive employee’s tips

The crediting tip is not included with any services. The FICA Tip Credit includes a general business tax credit on employer returns. Unlike remittance taxes, this does not reduce your tax liability. You can transfer your credit to another year at a later date. Employer Social Security tax credits help reduce the taxes of employees on ICA from employer taxpayers.

Streamlined Process

The Fill template simplifies the process of filling out Form 8846, saving you time and frustration.

Accurate Reporting

The template ensures that you are reporting all necessary information accurately and thoroughly.

Hassle-Free Editing

The template is editable, allowing you to customize it to your specific needs. Fill it out with key information regarding your claim and you’ll be guided accordingly.


By utilizing this free template, you can save money on expensive tax preparation services and maximize your savings through accurate credit reporting.

FAQ About Form 8846: Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

Form 8846 is a tax form used to claim the employer credit for social security and Medicare taxes paid on certain employee tips.
Businesses that pay social security and Medicare taxes on employee tips are eligible to use Form 8846.
Keeping in mind when making the payment is the maximum amount you may be able to use the credits for. If you pay employees the federal minimum wage before tipping, you can claim the full credit calculated. Employers paying less than that amount won’t receive a 100% employee tip credit. Instead, the tax officials are asking for additional research. This calculation will eventually see you count a percentage of the employee benefits in order to pay the difference in wages.

The employer’s FICA tip credit aims to give businesses whose employees have received a share of the tip income from a company that receives the tip from the employer. It is a measure that focuses on providing a more streamlined method of reducing payroll tax.

Although the statute’s shorthand title does not specifically address FICA tax rates it does allow employers to determine the total FICA and Medicare taxes paid on tips reported by the employer to claim. The credit reduces the federal income tax for employers by the percentage of employee income tax that the employee pays for part of the reported earnings.

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