Payroll for Restaurants

FICA TIP TAX CREDIT paid quarterly regardless of income.

Because HROi processes payroll as a PEO under it's Federal Tax ID number, your restaurant is eligible for a quarterly service fee credit regardless of your income. In addition, we handle all administration and tax credit filings. This is a significant advantage over other payroll service providers.  More time and money for you. What could be easier?

We’ll compile the data, prepare and file Form 8846, “Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.” This includes quarterly and year-to-date totals for tips, tips-to-minimum calculations, and FICA tax credits.

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Examples of FICA Tip Credit Savings

Sample Wage 1

  • Maria works 30 hours
    per week.
  • She is paid an hourly rate
    of $2.13 (state minimum).
  • Her reported tips average
    $500.00 per week.

Calculating the Credit

Maria’s weekly wages:
30 hours x $2.13/hr: $63.90
Weekly reported tips: $500
63.90 + 500.00 = $563.90

Wages, if paid at minimum rate.
30 hours worked x $5.15/hr:
30 × 5.15 = $154.50

Amount over minimum wage on which credit is figured:
563.90 − 154.50 = $409.40

Employer’s Social
Security/Medicare tax rate:
7.65% × 409.40 = $31.32

Potential annual savings per tipped employee per year:
31.32 × 52 weeks = $1,628.64*

Sample Wage 2

  • Bob works 30 hours
    per week.
  • He is paid an hourly rate
    of $5.15 (state minimum).
  • His reported tips average
    $750.00 per week.

Calculating the Credit

Bob’s weekly wages:
30 hours x $5.15/hr: $154.50
Weekly reported tips: $750
154.50 + 750.00 = $904.50 

Wages, if paid at minimum rate.
30 hours worked x $5.15/hr:
30 × 5.15 = $154.50

Amount over minimum wage on which credit is figured:
904.50 − 154.50 = $750.00

Employer’s Social
Security/Medicare tax rate:
7.65% × 750.00 = $57.38

Potential annual savings per tipped employee per year:
57.38 × 52 weeks = $2,983.50*

Sample Wage 3

  • Keisha works 30 hours
    per week.
  • She is paid an hourly rate
    of $7.50 (state minimum).
  • Her reported tips average
    $1000.00 per week.

Calculating the Credit

Keisha’s weekly wages:
30 hours x $7.50/hr: $225.00
Weekly reported tips: $1000
225.00 + 1000.00 = $1,225.00

Wages, if paid at minimum rate.
30 hours worked x $5.15/hr:
30 × 5.15 = $154.50

Amount over minimum wage
on which credit is figured:
1,225.00 − 154.50 = $1,070.50

Employer’s Social
Security/Medicare tax rate:
7.65% × 1,070.50 = $81.89

Potential annual savings per tipped employee per year:
81.89 × 52 weeks = $4,258.45*

Would you like to know your FICA Tip Credit savings?

Use our FICA Tip Tax Credit Calculator.

Calculate your savings

Benefits of the FICA Tip Credit

WITHOUT HROi
WITH HROi
Businesses must complete all forms and file for a credit on their own federal ID number.
HROi completes all forms and files for a credit.
Businesses must show a profit to be eligible to receive a credit.
HROi passes a credit along to clients regardless of their profitability.
A credit is filed at the end of the calendar year and paid at the end of the year.
HROi calculates and refunds the client for a credit quarterly.
Not all PEO competitors provide a credit to their clients.
HROi provides a credit to PEO clients.

* A processing fee will apply. Due to the Small Business and Work Opportunity Tax Act of 2007, the FICA tip credit will continue to be based on the old minimum wage of $5.15 per hour.