Unfortunately, scammers are exploiting confusion around this credit. Be aware of these types of tactics:
- False promises to employees: Fraudsters claim that servers, bartenders, or other tipped employees can claim the FICA Tip Tax Credit on their personal tax returns. This is false. The credit is available for Employers of tipped workers.
- Inflated refunds: Some tax preparers mislead businesses by exaggerating credits or filing incorrectly. The credit is available for the matching FICA paid, above minimum wage on employees.
- Social media misinformation: Posts circulate encouraging individuals to misreport tips or file fake forms. Reminder that doing this is tax fraud.
- Impersonation schemes: Scammers pose as IRS agents offering “help” with claiming the credit.
- Text or Email correspondences: There are circulating emails and text messages that are misleading. See a great example of a fraudulent email below. This credit begins for the 2025 tax year and is a permanent change going forward. It is not available for prior years as indicated in the below, scammer, email.
Stay safe! Follow these tips to keep yourself safe from FICA Tip Tax Credit scammers:
- Use a tax preparer that knows your industry!
- Know how and when the IRS will contact you: How to know it’s the IRS | Internal Revenue Service
- Stay up to date with information that is released directly from the IRS website regarding the FICA
Tip Credit for employers: FICA Tip Credit for employers | Internal Revenue Service - Read Kopsa Otte newsletters. 🙂