The Internal Revenue Service (IRS) recently released an information sheet attached to 2009 Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips. The note on the information sheet relates to employers that have claimed payroll tax forgiveness under the Hiring Incentives to Restore Employment Act of 2010 (HIRE Act).
According to the note, employers should do the following (all line references are to Form 8846):
If any tipped employee’s wages are exempt from social security taxes, check the box on line 4 and attach a separate computation showing the amount of tips subject to only the Medicare tax rate of 1.45%. Subtract these tips from the line 3 tips, and multiply the difference by .0765. Then, multiply the tips subject only to the Medicare tax by .0145. Enter the sum of these amounts on line 4.