Regardless of whether your club is primarily golf, yacht, tennis, or all of the above; chances are you have a food and beverage operation. The FICA tip credit is available to clubs that meet certain criteria related to food and beverage employees. The credit is generated from tips received by employees for services on which the club paid or incurred employer Social Security and Medicare taxes. Depending on the size of your club’s food and beverage operation, the credit could be substantial. Additionally, the credit is available for both taxable and exempt clubs; therefore all clubs could potentially use this credit to offset taxable income.
This tax credit goes back one year, or forward 20 years. The credit is based off of the amount paid over the federal minimum, not state minimum. Even if you don’t expect to show profit soon, this non refundable credit can build up to a large sum to counter a future taxable gain.
To find out more about this FICA tip credit, read this article from our affiliate McGladrey / RSM : http://rsmus.com/our-insights/newsletters/eclubnews/everything-you-need-to-know-about-the-fica-tip-credit.html
If you want more information, please contact Mark Guiley.