Food and beverage establishments may be able to get a tax credit for their employees’ tips. The credit is for the Social Security and Medicare (FICA) taxes the employer paid on the employee’s tip income. After employees report their tips to you, you must withhold and remit their share of FICA taxes and also pay the employer’s share. The credit is claimed as part of the general business credit. It’s equal to the employer’s share of FICA taxes paid on tip income in excess of what’s needed to bring the employee’s wages up to $5.15 per hour (the minimum wage on Jan. 1, 2007). If you pay each employee at least $5.15 an hour (excluding tips), you needn’t be concerned with this calculation. Call or visit our website for more information! www.mjscpa.com/
