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FICA Tips Tax Credit Recovery (IRS Code §45B)

Recover the FICA Tips Tax Credit (Current Year + Up to 3 Prior Years)

If you have tipped W-2 employees and you’re not filing Form 8846, there’s a strong chance you’re leaving real money behind. We help you recover the current year and, when eligible, go back up to three years through amended returns.


🍽️ Food & Beverage (The Classic §45B Credit)

Restaurants and hospitality businesses have been eligible for decades — but most never claim it because payroll providers don’t apply it automatically and many preparers don’t chase it.

We handle the full credit calculation using the rules that apply to food/beverage tipped employees, including the “non-creditable tips” minimum wage basis used in the calculation (Form 8846 instructions reference $5.15/hour for food or beverage employees). 


💇 Beauty & Personal Care (New Eligibility After 12/31/24 — Claimed on 2025 Returns)

As part of the 2025 Budget Reconciliation Bill (aka the One Big Beautiful Bill / One Big Beautiful Bill Act), signed into law July 4, 2025, the FICA tip credit was expanded to include beauty service establishments

The bill language extends §45B to “beauty services” and applies to tax years beginning after Dec. 31, 2024 (meaning it’s claimed with 2025 returns). 

Beauty services (as defined in the bill / IRS form instructions) include:

  • Barbering & hair care
  • Nail care
  • Esthetics
  • Body & spa treatments 

Important beauty-industry qualifier:

To claim the credit for beauty services, the law adds a threshold: tips for those services must exceed 15% of gross receipts for those services in the year. 

Beauty minimum wage basis for the credit: Form 8846 instructions reference $7.25/hour for beauty service employees. 


✨ Qualifying Beauty Businesses Where Tipping Is Standard

If tipping is customary and you employ W-2 staff, many of these often fall into the “beauty services” bucket (or contain qualifying services inside the business):

  • Hair salons & barbershops (stylists, colorists, barbers, assistants/shampoo staff)
  • Nail salons (manicures/pedicures)
  • Spas / wellness centers (facials, wraps, body treatments, etc.)
  • Esthetics & skincare studios (waxing, lashes, brows, tanning, etc.)
  • Makeup artists (studio/event work)

Note: Tipping is generally not expected/allowed for medical professionals performing medical procedures (Botox/fillers), but non-medical services in the same facility may still involve tips and may qualify depending on service type.

What We Do (And Why It Matters)

1: What is the FICA Tips Tax Credit?

It’s an income tax credit that lets eligible employers recover the employer-paid FICA (Social Security + Medicare) on employee-reported tips. The rate tied to that employer FICA portion is 7.65%.

2: Who qualifies for the credit?

Businesses with W-2 employees in industries where tipping is customary—traditionally food & beverage / hospitality, and now (new) beauty & personal care under the OBBB changes.

3: What changed for the Beauty & Personal Care industry?

Beauty & personal care businesses became new qualifying businesses after 12/31/24, and the credit is claimed with 2025 returns, due to the 2025 Budget Reconciliation Bill (OBBB) signed into law July 4, 2025.

4: What beauty businesses are typically tipped and may qualify?

What beauty businesses are typically tipped and may qualify?

Common examples include:

  • Hair salons & barbershops
  • Nail salons
  • Spas, wellness centers (facials, wraps, body treatments, etc.)
  • Esthetics & skincare studios (waxing, lashes, brows, tanning)
  • Makeup artists
  • Fitness services (trainers / group instructors) (where tipping is standard in that setting)


5: What’s the minimum wage threshold for the credit calculation?

For eligibility and credit math, the “minimum wage basis” differs by industry:

  • Restaurant/hospitality: $5.15 (for this credit’s calculation rules)
  • Beauty/personal care: $7.25 (for this credit’s calculation rules)


6: Is this a refund of payroll taxes?

No. The FICA Tip Credit does not refund payroll taxes you already paid. It offsets income tax owed by the business (C-Corp) or flows through to owners (S-Corp/Partnership). Refund outcomes depend on your tax liability and credit utilization rules.

7: How far back can we recover missed credits?

Often the current year plus up to the last three years (depending on filing timing and amendment rules). After enough time passes, that year is gone—no rewinds.

8: How Your Credit Gets Paid (And When Fees Are Charged)

Full Refund

  • You receive a full cash refund
  • No fee due at filing
  • Fee can be deducted after IRS processes refund (or optional advance)

Partial Refund + Partial Carry-Forward

  • Some refunded now, some applied to future taxes
  • If refund covers fee → no payment at filing
  • If not → invoiced when filed
  • Contingency-style when possible

Full Carry-Forward

  • Entire credit carries forward to offset future tax years
  • Fee is invoiced at filing (financing options available)


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