| Example FICA Tip Income Tax Credit: |
| An Employee receives $4.85 an hour, works 30 hours a week, and reports $125.00 in tips. State law follows federal law. Fed minimum wage is $5.85 an hour. |
| Step 1. Calculate Total Reported Weekly Compensation |
| $4.85/hr X 30 hours worked |
=$145.50 |
| Reported tips $125.00/wk |
+$125.00 |
| Total Reported Weekly Compensation |
=$270.00 |
| Step 2. Calculate wages paid at minimum wage. |
| $5.85/hr X 30 hours worked |
=$175.50 |
| Step 3. Determine tips that exceed minimum wage. |
| $270.00 - $175.50 |
=$94.50 |
| Step 4. Determine your tax credit. |
| $115.50 X 7.65% |
=$7.23/wk |
| Your Potential Annual FICA Tip Credit per Employee (working 50 weeks)* |
= $361.50 |
| *Not all businesses are eligible for the FICA Tip Credit |
