Credit for Employer Social Security and Medicare Taxes (Form 8846)
Form 8846 is used by eligible food and beverage employers to claim a credit for social security and Medicare taxes paid on employees' tips. It falls under the general business credit and must be filed within 3 years from the return's due date.
-
Purpose of Form
- Claim credit for specified employer-paid taxes on employees' tips.
- Integral part of the general business credit.
-
Filing Requirements
- Required for partnerships and S corporations.
- Other taxpayers can report through Form 3800 if sourced from a partnership or S corporation.
-
Eligibility Criteria
- Employers with tipped employees.
- Employers paying or incurring social security and Medicare taxes on tipped employees.
-
Credit Calculation
- Credit equals employer taxes on eligible tips.
- Exclusions for tips used to meet federal minimum wage.
-
Additional Medicare Tax
- Applies to Medicare wages and tips.
- Imposed only on the employee; no impact on the employer's credit.
Overall, the Form 8846 helps businesses in the food industry claim the credit for Social Security and Medicare taxes paid on certain employee tips.
*To view the current year's Form 8846, click here.