FICA Tip Credit Calculator: What Your Restaurant Is Actually Owed
The Formula
Creditable tips × 7.65% = Credit amount
That's it. The FICA tip credit (IRC §45B) returns the employer portion of FICA taxes you already paid on employee tips. The threshold for restaurants is $5.15/hour — not $7.25. Tips used to cover the gap between base wages and $5.15 are non-creditable. Everything else is credit.
Three Examples
| Restaurant | Tipped Employees | Annual Tips | Non-Creditable (at $5.15/hr) | Creditable Tips | Annual Credit | 3-Year Refund |
|---|---|---|---|---|---|---|
| Small café | 5 | $20,000 | $4,000 | $16,000 | $1,224 | $3,672 |
| Mid-size bistro | 15 | $60,000 | $12,000 | $48,000 | $3,672 | $11,016 |
| Full-service restaurant | 30 | $150,000 | $24,000 | $126,000 | $9,639 | $28,917 |
Non-creditable amount assumes each employee's base wages fall below the $5.15/hr threshold for some portion of their tips. Actual numbers vary by payroll structure.
Why $5.15 and Not $7.25
IRC §45B(b)(1)(B) locks the restaurant threshold at the January 1, 2007 minimum wage: $5.15/hour. Congress set this deliberately. The $7.25 threshold applies to beauty businesses under the 2025 OB3 expansion — not food and beverage. Using the wrong number shrinks your credit by 40% or more.
What You Need to File
Form 8846 — four lines:
- Total tips you paid FICA tax on
- Tips applied to the $5.15/hr threshold (non-creditable)
- Creditable tips (Line 1 − Line 2)
- Credit (Line 3 × 7.65%)
For amended returns: File Form 1040-X (or 1120-X/1120-S) for each open year. The statute allows three years of lookback. Each year includes its own Form 8846.
Documentation: Payroll registers showing tips, wages, and hours by employee and pay period. Form 8027 if you have 10+ tipped employees. Credit card tip reports from your POS.
Why Most Restaurants Haven't Claimed This
- Payroll platforms lump tips into gross wages — data extraction takes manual work
- Form 8846 doesn't appear in standard tax software
- The IRS website publishes the wrong threshold
- Generalist CPAs rarely file this form
Check Your Eligibility
Run your numbers with our free calculator →
Or get a free eligibility review — we'll tell you what your restaurant is owed before any work begins.