Schedule C and F 8846 FICA Tips Credit

[david3]

1040 Schedule C line 26 wages weren't automatically reduced by the amount of the FICA tips credit that was calculated on F 8846.

The Sch C IRS instructions list other credits that should reduce wages, but F 8846 isn't listed.

Shouldn't the wages be reduced by the amount of the credit? Do I manually enter a negative amount on line 26 "Other Work Credits"? Or is PS treating this correctly? 

[Terry53029]

Why do you want to take away a credit your client is eligible for ?

[david3]

I didn't say I wanted to take away the credit. I was asking why PS didn't automatically adjust the related expense for the amount of the credit, as required by the IRS.

I found out that we have to manually reduce the payroll tax amount on Sch C by the amount of the credit.

It doesn't make sense that PS automatically makes the adjustment for 1065s and 1120S, but not Sch Cs.

[Terry53029]

Sorry, read your question too fast 😊. Yes you need to reduce wages as amount of credit. Just list it on line 26 as other work credits ( don't use a negative number) 

[david3 · Accepted solution]

Thank you, Terry.

I found out that for Schedule C, the amount of payroll tax expense needs to be reduced by the amount of the credit.

[Terry53029]

Your welcome. The reason wages get reduced is tips are included in wages, but tips are paid by customers