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.
Related Guides
Why Your Accountant Never Told You About the FICA Tip Credit
The FICA tip credit has existed since 1993. Most CPAs never file it. Here's what they're missing — and why restaurant owners are sitting on unclaimed refunds.
Unlock Significant Cash Refunds with the FICA Tip Tax Credit—Here's How
Your restaurant could be eligible for a massive tax refund you've never claimed. Learn how the FICA Tip Tax Credit can put six-figure refunds back into your business.
Can a Trucking Company Get a Business Loan with Bad Credit?
Bad credit doesn't have to stop your fleet from growing. Discover how trucking companies with 550+ FICO scores can access $50K-$500K in fast working capital.