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.
▶ Information about Form 8846 and its instructions is at www.irs.gov/form8846.
▶

OMB No. 1545-0123

2016

Attachment
Sequence No. 98

Identifying number

Name(s) shown on return

Note: Claim this credit only for employer 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% (0.0765). If you had any tipped employees whose wages
(including tips) exceeded $118,500, 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, Part III, line 4f . . . . . . . . . .

6

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 16148Z

Form 8846 (2016)

Form 8846 (2016)

General Instructions
Section references are to the Internal
Revenue Code unless otherwise
noted.

Future Developments
For the latest information about
developments related to Form 8846
and its instructions, such as legislation
enacted after they were published, go
to www.irs.gov/form8846.

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.
Partnerships and S corporations
must file this form to claim the
credit. All other taxpayers are not
required to complete or file this form
if their only source for this credit is a
partnership or S corporation.
Instead, they can report this credit
directly on line 4f in Part III of Form
3800, General Business Credit.
For information regarding taxes
imposed on tips, including
information on the difference
between tips and service charges,
see Rev. Rul. 2012-18, 2012-26
I.R.B. at www.irs.gov/irb/2012-26.

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, employers
cannot claim the credit for taxes on
any tips that are used to meet the
federal minimum wage rate in effect
on January 1, 2007, $5.15 an hour.

Page

Therefore, 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 2016. 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 2016 is
taken into account.
A 0.9% Additional Medicare Tax
applies to Medicare wages and tips.
However, Additional Medicare Tax is
only imposed on the employee.
There is no employer share of
Additional Medicare Tax. Thus, there
is no effect on the credit for
employer social security and
Medicare taxes on certain employee
tips.

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.

2

Line 4
If any tipped employee’s wages and
tips exceeded the 2016 social
security tax wage base of $118,500
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 0.0765. Then, multiply
the tips subject only to the Medicare
tax by 0.0145. Enter the sum of
these amounts on line 4.
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 and
business taxpayers filing this form is
approved under OMB control
number 1545-0074 and 1545-0123
and is included in the estimates
shown in the instructions for their
individual and business income tax
return.
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.