FICA Tip Credit

If you are a restaurant that has employees receiving tips on payroll, you may be eligible for a federal tax credit the FICA Tip Credit. Businesses could receive 7.65% on tips that are reported on payroll. For example, if your W-3 summary of W-2s at the end of the year indicates 50,000 of tips, you may be able to receive a credit of 3,825.