“FICA Tip Credit” Gives Restaurant Owners Tax Savings on 2014 Tax Returns

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Full service restaurant owners with employees who receive tips from customers have an opportunity to claim a highly favorable federal tax credit on this year’s tax return. Restaurant owners can claim the “Credit for Employer Social Security and Medicare Taxes,” better known as the “FICA Tip Credit.” This tax credit is equal to the Social Security and Medicare taxes paid by an employer on certain employees’ tips earned working in a restaurant.

What is a tip?

According to Internal Revenue Service Revenue Ruling 2012-18, tips earned by servers in a restaurant are defined as:

  1. Payments made free from compulsion
  2. A payment the customer has …read more

    Read more here:: Tax

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