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
▶

Information on Form 8846 and its instructions is available at www.irs.gov/form8846.

OMB No. 1545-1414

2011

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 and Medicare taxes during the tax year (see instructions) . . . . . . . .

1

2

Tips not subject to the credit provisions (see instructions) . . . . . . . . . . .

2

3

Creditable tips. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . .

3

4

Multiply line 3 by 7.65% (.0765). If you had any tipped employees whose wages
(including tips) exceeded $106,800, see instructions and check here . . . . . ▶

4

5

Credit for employer social security and Medicare taxes paid on certain employee tips
from partnerships and S corporations . . . . . . . . . . . . . . . . . .

5

6

Add lines 4 and 5. Partnerships and S corporations, report this amount on Schedule K.
All others, report this amount on Form 3800, line 4f . . . . . . . . . . . . .

6

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 16148Z

Form 8846 (2011)

Form 8846 (2011)

General Instructions
Section references are to the Internal
Revenue Code.

What's New
The carryforwards, carrybacks, and
passive activity limitations for this
credit are no longer reported on this
form; instead, they must be reported
on Form 3800, General Business
Credit.

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.
Taxpayers other than partnerships
or S corporations whose only source
of this credit is from those passthrough entities are not required to
complete or file this form. Instead,
report this credit directly on the
applicable line of Form 3800,
General Business Credit.

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.

Page

For example, an employee worked
100 hours and received $450 in tips
for October 2011. 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 2011 is taken into
account.

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.

Line 4
If any tipped employee’s wages and
tips exceeded the 2011 social
security tax wage base of $106,800
subject to the 6.2% rate, 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.

2

Reduce the income tax deduction
for employer social security and
Medicare taxes by the amount on
line 4.
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.
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.