Form 8846 Credit for Employer Social Security and Medicare Taxes P

Form

8846

Department of the Treasury
Internal Revenue Service

Credit for Employer Social Security and Medicare Taxes
Paid on Certain Employee Tips
▶

Attach to your tax return.

OMB No. 1545-1414

2010

Attachment
Sequence No. 98

Identifying number

Name(s) shown on return

Note. Claim this credit only for social security and Medicare taxes paid by a food or beverage establishment where tipping is
customary for providing food or beverages. See the instructions for line 1.
1
Tips received by employees for services on which you paid or incurred employer social security
1
and Medicare taxes during the tax year (see instructions) . . . . . . . . . . . . .
2
3

Tips not subject to the credit provisions (see instructions) .
Creditable tips. Subtract line 2 from line 1 . . . . . .

4

Multiply line 3 by 7.65% (.0765). If you had any tipped employees whose wages (including
tips) exceeded $106,800 or were exempt from social security taxes, see instructions and
check here . . . . . . . . . . . . . . . . . . . . . . . . . . ▶
Credit for employer social security and Medicare taxes paid on certain employee tips from
partnerships and S corporations . . . . . . . . . . . . . . . . . . . . .
Add lines 4 and 5. Partnerships and S corporations, report this amount on Schedule K; all
others, go to line 7 . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit for employer social security and Medicare taxes paid on certain employee tips included
on line 6 from passive activities (see instructions) . . . . . . . . . . . . . . . .
Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . .
Credit for employer social security and Medicare taxes paid on certain employee tips allowed for
2010 from passive activities (see instructions) . . . . . . . . . . . . . . . . .
Carryforward of the credit for employer social security and Medicare taxes paid on certain
employee tips that originated in a tax year that began after 2006 (see instructions) . . . . .
Carryback of the credit for employer social security and Medicare taxes paid on certain
employee tips from 2011 (see instructions)
. . . . . . . . . . . . . . . . .
Add lines 8 through 11. Report this amount on Form 3800, line 29f . . . . . . . . . .

5
6
7
8
9
10
11
12

General Instructions
Section references are to the Internal
Revenue Code.

Purpose of Form
Certain food and beverage
establishments (see Who Should File
below) use Form 8846 to claim a credit
for social security and Medicare taxes
paid or incurred by the employer on
certain employees’ tips. The credit is
part of the general business credit.
You can claim or elect not to claim
the credit any time within 3 years from
the due date of your return on either
your original return or on an amended
return.

Who Should File
File Form 8846 if you meet both of the
following conditions.
1. You had employees who
received tips from customers for
providing, delivering, or serving food
or beverages for consumption if
tipping of employees for delivering or
serving food or beverages is
customary.

.
.

.
.

.
.

.
.

.
.

.
.

.
.

.
.

2. During the tax year, you paid or
incurred employer social security and
Medicare taxes on those tips.

How the Credit Is Figured
Generally, the credit equals the
amount of employer social security
and Medicare taxes paid or incurred
by the employer on tips received by
the employee. However, the amount of
tips for any month that are used to
figure the credit must be reduced by
the amount by which the wages that
would have been payable during that
month at $5.15 an hour exceed the
wages (excluding tips) paid by the
employer during that month.
For example, an employee worked
100 hours and received $450 in tips
for October 2010. The worker received
$375 in wages (excluding tips) at the
rate of $3.75 an hour. If the employee
had been paid $5.15 an hour, the
employee would have received wages,
excluding tips, of $515. For credit
purposes, the $450 in tips is reduced
by $140 (the difference between $515
and $375), and only $310 of the
employee’s tips for October 2010 is
taken into account.

For Paperwork Reduction Act Notice, see back of form.

Cat. No. 16148Z

.
.

.
.

.
.

.
.

2
3

4
5
6
7
8
9
10
11
12

Specific Instructions
Figure the current year credit from
your trade or business on lines 1
through 4.

Line 1
Enter the tips received by employees
for services on which you paid or
incurred employer social security and
Medicare taxes during the tax year.
Include tips received from
customers for providing, delivering, or
serving food or beverages for
consumption if tipping of employees
for delivering or serving food or
beverages is customary.

Line 2
If you pay each tipped employee
wages (excluding tips) equal to or
more than $5.15 an hour enter zero on
line 2.
Figure the amount of tips included
on line 1 that are not creditable for
each employee on a monthly basis.
This is the total amount that would be
payable to the employee at $5.15 an
hour reduced by the wages (excluding
tips) actually paid to the employee
during the month. Enter on line 2 the
total amounts figured for all
employees.
Form 8846 (2010)

Form 8846 (2010)

Page

Line 4

Line 9

If any tipped employee’s wages and
tips exceeded the 2010 social security
tax wage base of $106,800 subject to
the 6.2% rate or were exempt from
social security taxes because you
applied the Hiring Incentives to
Restore Employment (HIRE) Act
payroll tax exemption, check the box
on line 4 and attach a separate
computation showing the amount of
tips subject to only the Medicare tax
rate of 1.45%. Subtract these tips
from the line 3 tips, and multiply the
difference by .0765. Then, multiply the
tips subject only to the Medicare tax
by .0145. Enter the sum of these
amounts on line 4. For more
information on the HIRE Act payroll tax
exemption, visit the IRS website at
IRS.gov and enter the keyword HIRE
Act.
Reduce the income tax deduction
for employer social security and
Medicare taxes by the amount on line
4.

Enter the passive activity credit
allowed for the 2010 credit for
employer social security and Medicare
taxes paid on certain employee tips
from Form 8582-CR or Form 8810 that
is properly taken into account for
periods after 2006. Enter on line 5 of
Form 3800 the credit for employer
social security and Medicare taxes
paid on certain employee tips from
passive activities allowable for 2010
that is attributable to the credit
properly taken into account for periods
prior to 2007.

Line 7
Enter the amount included on line 6
that is from a passive activity.
Generally, a passive activity is a trade
or business in which you did not
materially participate. Rental activities
are generally considered passive
activities, whether or not you materially
participate. For details, see Form
8582-CR, Passive Activity Credit
Limitations (for individuals, trusts, and
estates), or Form 8810, Corporate
Passive Activity Loss and Credit
Limitations (for corporations).

Line 10
Use line 10 to show any carryforward
of the credit for employer social
security and Medicare taxes paid on
certain employee tips from 2009. For
carryforwards of the credit from years
prior to 2007, show such
carryforwards on line 6 of Form 3800.

Line 11
Use line 11 to show any carryback if
you amend your 2010 return to carry
back an unused credit from 2011.
Paperwork Reduction Act Notice.
We ask for the information on this form
to carry out the Internal Revenue laws
of the United States. You are required
to give us the information. We need it
to ensure that you are complying with
these laws and to allow us to figure
and collect the right amount of tax.

2

You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction
Act unless the form displays a valid
OMB control number. Books or
records relating to a form or its
instructions must be retained as long
as their contents may become material
in the administration of any Internal
Revenue law. Generally, tax returns
and return information are confidential,
as required by section 6103.
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated burden for individual
taxpayers filing this form is approved
under OMB control number 1545-0074
and is included in the estimates shown
in the instructions for their individual
income tax return. The estimated
burden for all other taxpayers who file
this form is shown below.
Recordkeeping . . 3 hr., 35 min.
Learning about
the law or the form . . . . 6 min.
Preparing and sending
the form to the IRS . . . . 9 min.
If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. See the instructions for the
tax return with which this form is filed.