Recover Employer FICA Taxes Paid on Employee Tips
If your business has tipped employees, you may qualify for a federal tax credit that returns employer-paid FICA taxes you’ve already paid to the IRS.
- ✔’IRS Code §45B
- ✔Restaurants, Bars, Salons & Spas
- ✔Claim current year + up to 3 prior years
Have you claimed your overpayment
On FICA Tip Taxes to the IRS?
Billions in FICA Tip Tax Credits go unclaimed each year. Find out if your business qualifies.
Do You Qualify for the FICA Tip Tax Credit?
If your business meets the conditions below, you may be eligible to claim the credit.
Business Type
- ✔Operates in food, beverage, hospitality, or qualifying beauty/personal care
- ✔Tipping is customary for services provided
- ✔Employees receive tips directly from customers
Requirements
- ✔Workers are classified as W-2 employees
- ✔Employees report tip income
- ✔Employer pays FICA taxes on reported tips
- ✔Wages + tips exceed the applicable minimum wage threshold
Industry Specifics
- ✔Restaurants & hospitality: credit applies above $5.15/hour
- ✔Beauty & personal care (effective 12/31/24): Credit applies above $7.25/hour or Tip income exceeds 15% of gross receipts
- ✔Tips are voluntary (not service charges or auto-gratuities)
What Is the FICA Tip Tax Credit?
The FICA Tip Tax Credit is a federal income tax credit created under IRS Code Section 45B that allows eligible employers to recover the employer-paid portion of Social Security and Medicare taxes (FICA) on employee-reported tips.
When employees earn tips, those tips are treated as taxable wages — even though the employer never receives that income. As a result, businesses pay payroll taxes on money that passes directly from customer to employee.
This credit exists to offset that burden and reward businesses that accurately report tip income.
FICA Tip Credit Highlights
- ✔Dollar-for-dollar reduction of income tax owed
- ✔Applies to employer-paid FICA taxes (7.65%)
- ✔Available to restaurants, bars, and hospitality businesses
- ✔Expanded to beauty & personal care industries (effective 12/31/24)
- ✔Claim current year + up to 3 prior years
Most Eligible Businesses Never Claim This Credit
Money
Money
Billions in FICA Tip Tax Credits go unclaimed each year — not because businesses don't qualify, but because the credit is misunderstood or overlooked by payroll providers and tax preparers.
Your Partner in FICA Tip Tax Credits
Navigating the FICA Tip Tax Credit requires more than payroll reports. It requires understanding how wages, tips, minimum wage thresholds, and IRS filing rules intersect — and most providers simply don't do that work.
We specialize in identifying, calculating, and filing FICA Tip Tax Credits correctly and defensibly. From eligibility review to IRS documentation, we handle the details so you can claim the credit with confidence.
Whether you're filing for the first time or recovering credits from prior years, our role is simple: help you claim what the tax code already allows.
Why This Credit Exists
The FICA Tip Tax Credit wasn't created as a loophole or special exception. It was intentionally written into the tax code to encourage job creation and help offset payroll costs for businesses that employ tipped workers.
Congressional Intent Behind the FICA Tip Tax Credit
Congress created §45B to acknowledge that tipped employees generate taxable wages that employers never directly receive. The credit was designed to offset the employer's share of FICA taxes on those tips, making it easier for food service and hospitality businesses to maintain compliant payroll practices and keep tipped workers employed.
End-to-End FICA Tip Credit Support
Claiming the FICA Tip Tax Credit isn't difficult — but it is technical. It requires aligning payroll data, tip reporting, wage thresholds, and IRS filing rules correctly. That's where most businesses — and even experienced tax professionals — miss it.
Here's how we streamline the process:
We review your business structure, payroll, and tip reporting to confirm eligibility
We calculate eligible employer-paid FICA taxes in accordance with IRS rules
We prepare and file IRS Form 8846 with proper supporting documentation
We coordinate with your payroll provider and tax preparer as needed
We ensure documentation is audit-ready and defensible
No guesswork. No shortcuts. No disruption to your operations.
Check Your FICA Tip Credit Eligibility
Use the sliders below to estimate your potential annual credit.
FICA Tip Credit Calculator
Estimated Annual Credit
$5,967
Based on 10 tipped employees · Preliminary estimate only
This is not a tax filing and no payment is required. Preliminary estimate only — final amounts require complete payroll and tip data.