Form 8846

Department of the Treasury 

Internal Revenue Service

Credit for Employer Social Security and Medicare Taxes 

Paid on Certain Employee Tips

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

OMB No. 1545-1414

2011

Attachment 

Sequence No. 98

Name(s) shown on return Identifying number

Note. Claim this credit only for 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% (.0765). If you had any tipped employees whose wages 

(including tips) exceeded $106,800, 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, line 4f . . . . . . . . . . . . . 6 

For Paperwork Reduction Act Notice, see instructions. Cat. No. 16148Z Form 8846 (2011)
Form 8846 (2011) Page 2

General Instructions

Section references are to the Internal 

Revenue Code.

What's New

The carryforwards, carrybacks, and 

passive activity limitations for this 

credit are no longer reported on this 

form; instead, they must be reported 

on Form 3800, General Business 

Credit.

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.

Taxpayers other than partnerships 

or S corporations whose only source 

of this credit is from those passthrough entities are not required to 

complete or file this form. Instead, 

report this credit directly on the 

applicable line of Form 3800, 

General Business Credit. 

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, 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 2011. 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 2011 is taken into 

account.

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.

Line 4

If any tipped employee’s wages and 

tips exceeded the 2011 social 

security tax wage base of $106,800 

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 .0765. Then, multiply 

the tips subject only to the Medicare 

tax by .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 

taxpayers filing this form is approved 

under OMB control number 

1545-0074 and is included in the 

estimates shown in the instructions 

for their individual income tax return. 

The estimated burden for all other 

taxpayers who file this form is shown 

below.

Recordkeeping . . 3 hr., 35 min.

Learning about 

the law or the form . . . . 6 min.

Preparing and sending 

the form to the IRS . . . . 9 min.

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.