Employers in food or beverage establishments where tipping is customary can claim an income tax credit for the amount of social security and Medicare taxes paid (employer's share) on tips, other than tips used to meet the minimum wage requirement.
US Code:
26 USC 45B
Name of Law: Credit for portion of employer social security taxes paid with respect to employee cash tips
US Code:
26 USC 38
Name of Law: General business credit
Certain food and beverage establishments use Form 8846 to claim a credit for social security and Medicare taxes paid or incurred by the employer on certain employees' tips.
The Form 3800 has been redesigned to figure the passive activity limit and carryovers related to specified credits (IRC section 38(c)(4)). Lines 7 through 11 were removed, since the passive activity limit and the carryover amounts are calculated on Form 3800.
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 the taxpayer applied the Hiring Incentives to Restore Employment (HIRE) Act payroll tax exemption, taxpayers must check box on line 4 and attach a separate computation showing the amount of tips subject to only the Medicare tax rate of 1.45%. The additional burden involved in computing this amount, in conjunction with other program changes, will result in an estimated annual burden increase of 18,228 hours.
$650
No
No
No
No
No
Uncollected
R. Holmes 202 622-3685
No
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips
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Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips