OMB No. 1545-1414 Credit for Employer Social Security and Medicare Taxes

Paid on Certain Employee Tips Form 8846

© Attach to your tax return. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 98

Name(s) shown on return Identifying number

1

1

2 2

4

4

5

6

Form 8846 (2008)

Tips received by employees for services on which you paid or incurred employer social security

and Medicare taxes during the tax year (see instructions)

3

Credit for employer social security and Medicare taxes paid on certain employee tips from

partnerships and S corporations

6 Add lines 4 and 5. Partnerships and S corporations, report this amount on Schedule K; all

others, go to line 7

3

Cat. No. 16148Z

Tips not subject to the credit provisions (see instructions)

Creditable tips. Subtract line 2 from line 1

Multiply line 3 by 7.65% (.0765). If you had any tipped employees whose wages (including tips) 

exceeded $102,000, see instructions and check here ©

5

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.

For Paperwork Reduction Act Notice, see back of form.

12 Add lines 8 through 11. Report this amount on Form 3800, line 29f 12

7 Credit for employer social security and Medicare taxes paid on certain employee tips included

on line 6 from passive activities (see instructions) 7

8 Subtract line 7 from line 6 8

9 Credit for employer social security and Medicare taxes paid on certain employee tips allowed

for 2008 from passive activities (see instructions) 9

11

11 Carryback of the credit for employer social security and Medicare taxes paid on certain employee 

tips from 2009 (see instructions)

2008

10 Carryforward of the credit for employer social security and Medicare taxes paid on certain

employee tips that originated in a tax year that began after 2006 (see instructions) 10

Who Should File

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.

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. For example, an employee worked

100 hours and received $450 in tips

for October 2008. 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 2008 is taken into

account.

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.

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.

General Instructions

Section references are to the

Internal Revenue Code.

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.

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.

If you pay each tipped employee

wages (excluding tips) equal to or

more than $5.15 an hour enter zero

on line 2.

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.

Specific Instructions

Figure the current year credit from

your trade or business on lines 1

through 4.
Form 8846 (2008) Page 2

Line 4

Reduce the income tax deduction for

employer social security and Medicare

taxes by the amount on line 4.

If any tipped employee’s wages and

tips exceeded the 2008 social security

tax wage base of $102,000 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. Line 11

Use line 11 to show any carryback if

you amend your 2008 return to carry

back an unused credit from 2009.

Line 7

Enter the amount included on line 6

that is from a passive activity.

Generally, a passive activity is a trade

or business in which you did not

materially participate. Rental activities

are generally considered passive

activities, whether or not you materially

participate. For details, see Form

8582-CR, Passive Activity Credit

Limitations (for individuals, trusts, and

estates), or Form 8810, Corporate

Passive Activity Loss and Credit

Limitations (for corporations).

Line 10

Use line 10 to show any carryforward

of the credit for employer social

security and Medicare taxes paid on

certain employee tips from 2007. For

carryforwards of the credit from

years prior to 2007, show such

carryforwards on line 6 of Form 3800.

Medicare taxes paid on certain

employee tips from Form 8582-CR or

Form 8810.

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.

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.

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.

Line 9

Enter the passive activity credit

allowed for the 2008 credit for

employer social security and

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