
Is a Service Charge a Tip? Service Charge vs Tip Rules Restaurants Must Know
A service charge is not a tip under IRS rules. The legal test, the payroll tax differences and why service charges never earn the FICA tip credit.
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Restaurant tax planning insights from the FORCS team.

A service charge is not a tip under IRS rules. The legal test, the payroll tax differences and why service charges never earn the FICA tip credit.
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The FICA tip credit refunds the employer share of Social Security and Medicare taxes on tips above $5.15 an hour. Eligibility, Form 8846 and the math.
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