May 25, 2007 Targeted Tax Break For Restaurants Signed Into New Tax Bill

 

 

* Employee cash tips The employer Social Security credit under Sec. 45B (sometimes referred to as the "FICA tip credit") will continue to be based on the prior minimum wage of $5.15/ hour. This will prevent this credit from being reduced due to the higher hourly wage. The provision is effective for tips received for services performed after 2006.

 

 

AMT: The Act waives the corporate and individual AMT limits on the WOTC and the FICA tip credit. Both the WOTC and the FICA tip credit may be used to offset AMT liability.

 

 

 

   

What does this mean in plain English to the average restaurant?

 

It means that owners will now be able to receive dollar for dollar tax credits for any Federal Income tax owed.

 

If the average restaurant reports tips of $150,000 per year they may get a credit of $10,000. It would be like getting a check for $10,000.

 

 

Of course proper tax planning and filing is essential to get your tax break.