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Form 8846 (2023) Page 2
General Instructions Therefore, the amount of tips for any tax wage base of $160,200 subject to
month that are used to figure the the 6.2% rate, check the box on line 4
Section references are to the Internal credit must be reduced by the amount and attach a separate computation
Revenue Code unless otherwise by which the wages that would have showing the amount of tips subject to
noted. been payable during that month at only the Medicare tax rate of 1.45%.
Future Developments $5.15 an hour exceed the wages Subtract these tips from the line 3 tips,
For the latest information about (excluding tips) paid by the employer and multiply the difference by 0.0765.
developments related to Form 8846 during that month. Then, multiply the tips subject only to
and its instructions, such as legislation For example, an employee worked the Medicare tax by 0.0145. Enter the
enacted after they were published, go 100 hours and received $450 in tips sum of these amounts on line 4.
to www.irs.gov/Form8846. for October 2023. The worker received Reduce the income tax deduction
$375 in wages (excluding tips) at the for employer social security and
Purpose of Form rate of $3.75 an hour. If the employee Medicare taxes by the amount on line
Certain food and beverage employers had been paid $5.15 an hour, the 4.
(see Who Should File below) use Form employee would have received wages, Fiscal year taxpayers. If you have an
8846 to claim a credit for social excluding tips, of $515. For credit employee with wages and tips paid in
security and Medicare taxes paid or purposes, the $450 in tips is reduced 2024 that exceeded the 2024 social
incurred by the employer on certain by $140 (the difference between $515 security wage base of $168,600 by the
employees’ tips. The credit is part of and $375), and only $310 of the end of the 2023 fiscal year, follow the
the general business credit. employee’s tips for October 2023 is Line 4 instructions above to determine
You can claim or elect not to claim taken into account. the amount to enter on that line. The
the credit any time within 3 years from A 0.9% Additional Medicare Tax determination whether the tipped
the due date of your return on either applies to Medicare wages and tips. employee’s wages exceeds the social
your original return or on an amended However, Additional Medicare Tax is security wage base is made for each
return. only imposed on the employee. There calendar year.
Partnerships and S corporations is no employer share of Additional
must file this form to claim the credit. Medicare Tax. Thus, there is no effect Paperwork Reduction Act Notice.
All other taxpayers are not required to on the credit for employer social We ask for the information on this form
complete or file this form if their only security and Medicare taxes on certain to carry out the Internal Revenue laws
source for this credit is a partnership employee tips. of the United States. You are required
or S corporation. Instead, they can to give us the information. We need it
report this credit directly on line 4f in Specific Instructions to ensure that you are complying with
Part III of Form 3800, General Figure the current year credit from these laws and to allow us to figure
Business Credit. your trade or business on lines 1 and collect the right amount of tax.
For information regarding taxes through 4. You are not required to provide the
imposed on tips, including information Line 1 information requested on a form that is
on the difference between tips and Enter the tips received by employees subject to the Paperwork Reduction
service charges, see Rev. Rul. for services on which you paid or Act unless the form displays a valid
2012-18, 2012-26 I.R.B., at www.irs. incurred employer social security and OMB control number. Books or
gov/irb/2012-26_IRB#RR-2012-18. Medicare taxes during the tax year. records relating to a form or its
instructions must be retained as long
Who Should File Include tips received from as their contents may become material
File Form 8846 if you meet both of the customers for providing, delivering, or in the administration of any Internal
following conditions. serving food or beverages for Revenue law. Generally, tax returns
consumption if tipping of employees and return information are confidential,
1. You had employees who received for delivering or serving food or as required by section 6103.
tips from customers for providing, beverages is customary.
delivering, or serving food or The time needed to complete and
beverages for consumption if tipping Line 2 file this form will vary depending on
of employees for delivering or serving If you pay each tipped employee individual circumstances. The
food or beverages is customary. wages (excluding tips) equal to or estimated burden for individual and
2. During the tax year, you paid or more than $5.15 an hour, enter zero on business taxpayers filing this form is
incurred employer social security and line 2. approved under OMB control number
Medicare taxes on those tips. Figure the amount of tips included 1545-0074 and 1545-0123 and is
on line 1 that are not creditable for included in the estimates shown in the
How the Credit Is Figured each employee on a monthly basis. instructions for their individual and
Generally, the credit equals the This is the total amount that would be business income tax return.
amount of employer social security payable to the employee at $5.15 an If you have comments concerning
and Medicare taxes paid or incurred hour reduced by the wages (excluding the accuracy of these time estimates
by the employer on tips received by tips) actually paid to the employee or suggestions for making this form
the employee. However, employers during the month. Enter on line 2 the simpler, we would be happy to hear
cannot claim the credit for taxes on total amounts figured for all from you. See the instructions for the
any tips that are used to meet the employees. tax return with which this form is filed.
federal minimum wage rate in effect on
January 1, 2007, of $5.15 an hour. Line 4
If any tipped employee’s wages and
tips exceeded the 2023 social security
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