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

Paid on Certain Employee Tips Form 8846

© Attach to your return. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 98

Name(s) shown on return Identifying number

Current Year Credit

1

1

2 2

4

4

5

6

Tax Liability Limitation (See Who Must File Form 3800 to see if you complete Part II or file Form 3800.)

7a Individuals. Enter amount from Form 1040, line 40

7

Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A,

Part I, line 1) 

b

c Other filers. Enter regular tax before credits from your return (see instructions)

8 Credits that reduce regular tax before the general business credit:

a Credit for child and dependent care expenses (Form 2441, line 10) 8a

b Credit for the elderly or the disabled (Schedule R (Form 1040), line 21) 8b

d Foreign tax credit (Form 1116, line 32, or Form 1118, Sch. B, line 12) 8d

e Possessions tax credit (Form 5735) 8e

8f f

8g g Credit for fuel from a nonconventional source

h Qualified electric vehicle credit (Form 8834, line 19) 8h

8i i Add lines 8a through 8h

9 Net regular tax. Subtract line 8i from line 7 9

10 Tentative minimum tax (see instructions):

a Individuals. Enter amount from Form 6251, line 26

b Corporations. Enter amount from Form 4626, line 13 10

c Estates and trusts. Enter amount from Form 1041, Schedule H, line 37

11 Net income tax:

a Individuals. Add line 9 above and line 28 of Form 6251 

b Corporations. Add line 9 above and line 15 of Form 4626 11

c Estates and trusts. Add line 9 above and line 39 of Form 1041, Schedule H

12 If line 9 is more than $25,000, enter 25% (.25) of the excess (see instructions) 12

13 Subtract line 10 or line 12, whichever is greater, from line 11. If less than zero, enter -0- 13

14 Credit allowed for the current year. Enter the smaller of line 6 or line 13. This is your General

Business Credit for 1994. Enter here and on Form 1040, line 44; Form 1120, Schedule J, line

4e; Form 1120-A, Part I, line 2a; Form 1041, Schedule G, line 2c; or on the appropriate line of

other income tax returns 14

Form 8846 (1994)

Part I

Part II

Tips reported by employees for services performed after December 31, 1993, on which you paid

or incurred employer social security and Medicare taxes during the tax year 

3

Form 8846 credits from

flow-through entities

6 Total current year credit. Add lines 4 and 5

%

%

%

3

Cat. No. 16148Z

c Mortgage interest credit (Form 8396, line 11)

Orphan drug credit (Form 6765, line 10)

8c

Tips not subject to the credit provisions (see instructions)

Creditable tips. Subtract line 2 from line 1

Current year credit (see instructions). Multiply line 3 by 7.65% (.0765). If you have any tipped

employee(s) whose wages (including tips) exceeded $60,600, check here ©

a

b

Shareholder

Partner

If you are a—

5

Then enter Form 8846 credit(s) from—

Schedule K-1 (Form 1065) lines 13d, 13e, or 14

Schedule K-1 (Form 1120S) lines 12d, 12e, or 13 %

Paperwork Reduction Act

Notice

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. You can write to both the IRS and

the Office of Management and Budget

at the addresses listed in the

instructions for the tax return with which

this form is filed.

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.

Recordkeeping 6 hr., 13 min.

Learning about

the law or the form 30 min.

Preparing and sending

the form to the IRS 37 min.

The time needed to complete and file

this form will vary depending on

individual circumstances. The estimated

average time is:

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 consumed on the premises. See the instructions for line 1.
Form 8846 (1994) Page 2

General Instructions

Purpose of Form

Who Should File

Employers who meet both the

conditions below should file:

How the Credit Is Figured

Who Must File Form 3800

The general business credit consists

of the following credits:

Specific Instructions

Line 2.—If you pay each tipped

employee wages (excluding tips) equal

to or more than the Federal minimum

wage rate, enter zero on line 2.

S Corporations and Partnerships

Part II

Line 10.—Enter the tentative minimum

tax (TMT) that was figured on the

appropriate alternative minimum tax

(AMT) form or schedule. Although you

may not owe AMT, you must still

compute the TMT to figure your credit.

Line 12.—See section 38(c)(3) for

special rules for married couples filing

separate returns, for controlled groups,

and for estates and trusts.

Line 14.—If you cannot use part of the

credit because of the tax liability

limitation (line 14 is less than line 6),

carry the excess to other years. The

excess credit cannot be carried back to

any year ending before August 10, 1993.

See the separate instructions for Form

3800 for details.

Section references are to the Internal

Revenue Code unless otherwise noted.

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 under

section 38 and is figured under the

provisions of section 45B.

● During the tax year, paid or incurred

employer social security and Medicare

taxes after December 31, 1993, on tips

received by employees for services

performed after December 31, 1993;

and

● Have employees whose tips are

received at food or beverage

establishments for the provision of food

or beverages consumed on the premises

of the establishment.

Generally, the credit equals the amount

of employer social security and Medicare

taxes paid or incurred by the employer

on tips received and reported to the

employer by the employee. However, the

employer social security and Medicare

taxes on those tips that are used to

meet the Federal minimum wage rate

applicable to the employee under the

Fair Labor Standards Act are not used in

If for this year you have more than one

of the credits included in the general

business credit listed below, a carryback

or carryforward of any of the credits, or

a credit from a passive activity, you must

complete Form 3800, General Business

Credit, instead of completing Part II of

Form 8846 to figure the tax liability

limitation.

Tips are deemed to be received by the

employee when a written statement

identifying the tips is furnished to the

employer by the employee as required

by section 6053(a). Normally, the

employee must report to the employer

tips received during any month no later

than the 10th day of the following

month. An employer may require that

tips be reported more often than

monthly.

For example, tips received by an

employee during December 1994 and

reported to an employer on December

30, 1994, are deemed to be paid in

1994. Tips received by an employee

during December 1994 and reported to

an employer on January 6, 1995, are

deemed to be paid in 1995.

Complete lines 1 through 4 to figure the

current year credit from your trade or

business. Skip lines 1 through 4 if you

are claiming only a credit that was

allocated to you from an S corporation

or a partnership.

Printed on recycled paper

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. Part I

Line 4.—If any tipped employee’s wages

and tips exceeded the 1994 social

security tax wage base of $60,600

subject to the 6.2% (.062) 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

All taxpayers must reduce the income

tax deduction for employer social

security and Medicare taxes by the

amount of the current year credit on 

line 4.

However, tips received by employees

in December 1993 and reported to the

employer after December 31, 1993, are

not included in the computation because

the services were performed before

January 1, 1994.

For example, an employee worked

100 hours and reported $300 in tips for

January. The worker received $325 in

wages (excluding tips) at the rate of

$3.25 an hour. Because the Federal

minimum wage rate was $4.25 an hour,

the employee would have received

wages, excluding tips, of $425 had the

employee been paid at the Federal

minimum wage rate. Thus, only $200 of

the employee’s tips for January is taken

into account for credit purposes.

● Investment (Form 3468),

● Jobs (Form 5884),

● Alcohol used as fuel (Form 6478),

● Research (Form 6765),

● Low-income housing (Form 8586),

● Enhanced oil recovery (Form 8830),

● Renewable electricity production

(Form 8835),

● Indian employment (Form 8845),

● Employer social security and Medicare

taxes paid on certain employee tips

(Form 8846), and

● Contributions to selected community

development corporations (Form 8847).

The empowerment zone employment

credit (Form 8844), while a component

of the general business credit, is figured

separately on Form 8844 and is never

carried to Form 3800.

● Disabled access (Form 8826),

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 the Federal minimum

wage rate 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 1.—Enter the tips reported by

employees for services performed after

December 31, 1993, on which you paid

or incurred employer social security and

Medicare taxes during the tax year.

Include only tips received from

customers in connection with providing

food or beverages for consumption on

the premises of a food or beverage

establishment where tipping is

customary. Do not include tips for

carryouts or tips to food deliverers such

as pizza delivery persons.

S corporations and partnerships figure

their current year credit on lines 1

through 4, enter any credit from other

flow-through entities on line 5, and

allocate the credit on line 6 to the

shareholders or partners. Attach Form

8846 to the S corporation or partnership

return and show on Schedule K-1 each

shareholder’s or partner’s credit.

Line 7c.—Form 990-T filers, enter the

total of either lines 35c and 37 or lines

36 and 37, whichever applies.

the computation. The Federal minimum

wage rate (since April 1, 1991) is $4.25

per hour.

1.45% (.0145). 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.