Plain English

How to Get Paid

How these tax credits actually turn into money in your bank account - no jargon, real numbers.

1. A credit is not a deduction - it's worth way more

This is the single most important thing to understand, because most people mix them up:

A DEDUCTION lowers your income

You subtract it before tax is calculated. A $1 deduction only saves you your tax rate on that dollar - roughly 21–37¢.

A CREDIT lowers your tax itself

It comes straight off the tax you owe, dollar-for-dollar. A $1 credit saves you the full $1.

So a credit is worth about 3–5× more than a deduction of the same size. The FICA tip credit, the health-care credit, all of them - these are credits. That's why they're a big deal.

$31,338 as a credit ≈ $31,338 off your tax. That same $31,338 as a deduction would only be worth about $6,500. Same number, 5× the value.

2. When do you actually get the money?

One simple rule decides whether it's a check to your bank or a smaller tax bill:

If you've already paid that year's tax in → the credit comes back as a refund.
If you haven't paid it yet → the credit just makes your tax bill smaller.

You “pay in” two ways: you already filed & paid the year, or you made quarterly estimated payments during it. So:

A past year you already filed (e.g. 2024): your CPA files an amended return. You already paid that tax, so the credit makes you overpaid → the IRS refunds you (weeks to a few months).
A finished year you're about to file (e.g. 2025 next spring): if you made estimated payments through the year (most profitable businesses do), the credit makes those payments more than you owe → refund. If not, it just shrinks the check you write at filing.
The current year in progress (e.g. 2026): you claim it when you file next spring. Same deal - refund if you prepaid, smaller bill if not. You can even lower your estimated payments nowto keep the cash this year.

One limit: a credit can only wipe out tax you actually owe that year. Any leftover isn't lost - it carries back 1 year and forward up to 20. Profitable businesses almost always have enough tax to use it right away.

When should you file to get your money fastest?

Past years you already filed → amend now, don't wait. You already paid that tax, so amending turns it into a refund check in weeks - and you only have 3 years to amend before that money is gone for good. This is the fastest cash and the one people leave on the table.
The year that just ended → claim it on this spring's return. File on time (or with your normal extension); if you made quarterly estimates, the credit turns into a refund.
The year in progress → don't wait for next spring. You can lower your remaining quarterly estimated payments now in anticipation of the credit - keeping the cash in your account this year instead of loaning it to the IRS until the refund.

Rule of thumb: a dollar back now beats a dollar back later. Amend the open past years, claim the current one, and trim your estimates going forward.

3. The FICA tip credit (§45B), specifically

When your employees report tips, you (the employer) pay 7.65% Social Security + Medicare tax on those tips. The §45B credit gives that 7.65% back to you. It's money you already spent - you're just claiming it.

Report $100,000 in tips for the year → about $7,650 credit. It scales straight with your tips.

One catch (§280C): the IRS won't let you both deduct that FICA tax and take the credit for it - no double-dipping. So you give back the deduction on that FICA, which trims the credit's net value by your tax rate. Bottom line: you keep roughly credit × (1 − your tax rate).

4. What you actually keep - a worked example

Take the real Little Caesars franchisee, $31,338 in tip credits across 2024–2025:

Credit identified$31,338

− §280C give-back (≈ your tax rate)≈ −$7,000

= In your pocket (net)≈ $24,000

− Our success fee (15% — this credit is inside the $250k first tier; deductible)≈ −$4,700

= You keep≈ $19,000+

Your fee is a deductible business expense, so its real cost is less than the sticker. And without finding the credit, that whole amount stays unclaimed - $0 to you.

5. What we do vs. what your CPA does

We're calculation software. We read your payroll, find the credits, and package a line-by-line, IRS-ready set of schedules. We never file and never sign anything. Your own CPA reviews every figure and files it. You only pay us after a credit is realized - free until then.

6. Our tiered success fee - and why bigger credits pay a lower rate

The fee is marginal (bracket-style): each slice of your realized credit is charged at its own rate. Crossing a breakpoint never raises the rate on the whole amount - only the dollars above the line move to the next rate. The schedule:

15% on the first $250k10% from $250k to $1M7% on realized credit above $1M

Worked example - a $500,000 credit. Notice the first $250k still bills at 15%; only the next slice steps down:

15% on $250,000$37,500

10% on $250,000$25,000

= Total fee (effective 12.5%)$62,500

Same success-fee rules apply: nothing is owed until your CPA files and you mark it filed.

6. What records you'll need for each credit

We compute the number; the IRS wants records behind it. Gather these so your CPA can file without a single follow-up email. (This same list rides inside every packet.)

Sec. 45B - FICA Tip Credit (Form 8846)

□Employee tip reports - Form 4070 or your POS/electronic equivalent (each employee's reported tips, by month).
□Payroll records showing hours, cash wages, and reported tips per employee.
□Form 941s showing the employer Social Security + Medicare tax paid on tips (Box 5b).
□Form 8027 if you're a large food/beverage establishment (>10 employees on a typical business day).

Sec. 45R - Small-Business Health Care (Form 8941)

□Proof coverage was bought through the SHOP Marketplace (REQUIRED since 2014) - your SHOP enrollment.
□Premium invoices/statements showing you paid a uniform 50%+ of each enrolled employee's premium.
□Payroll records to compute FTEs (fewer than 25) and average annual wages.
□Controlled-group / related-entity details (Reg. 1.45R-4). Remember: only a 2-consecutive-year credit period.

Sec. 45E / 45T - Retirement Plan Startup (Form 8881)

□Signed plan adoption documents (401(k)/SEP/SIMPLE) - a NEW plan, within its first 3 years.
□Dated invoices/contracts for qualified startup & administration costs.
□Payroll extract proving 100 or fewer employees earned $5,000+, with at least one non-highly-compensated participant.
□Auto-enrollment (EACA) documentation for the Sec. 45T $500/yr piece; employer-contribution records.

Sec. 44 - Disabled Access (Form 8826)

□Receipts, invoices, contracts + proof of payment for each ADA/accessibility expense.
□An accessibility-expense log (vendor, date, description, amount, and how each cost improves access).
□Proof of eligible-small-business status: prior-year gross receipts $1M or less, OR 30 or fewer full-time employees.

Sec. 45S - Paid Family & Medical Leave (Form 8994)

□Your WRITTEN paid-leave policy - dated BEFORE the leave, 2+ weeks/yr, paying 50%+ of wages, FMLA purposes only, with 'non-interference' language.
□Records of who took qualifying leave and the wages paid during that leave.
□Each employee's tenure (1+ year) and prior-year compensation (at or under the year's limit).

Sec. 45P - Differential Wage (Military) (Form 8932)

□Active-duty military orders (more than 30 days) for each employee.
□Records of the differential wage payments (the civilian-military pay gap), capped at $20,000/employee.
□Proof the employee was employed for 91+ days before the call-up.

Sec. 45F - Employer-Provided Childcare (Form 8882)

□Invoices/contracts for the childcare facility spend (build/operate, or a contract with a qualified facility/intermediary) + resource-and-referral spend.
□Licensing records proving it's a qualified childcare facility (state-licensed).
□A note to track the 10-year recapture window (if the facility closes or changes ownership).

GBC - General Business Credit (roll-up) (Form 3800)

□Each credit's own substantiation (listed above) - Form 3800 just totals them.
□For a pass-through, the Schedule K-1 flowing the credit to the owner's return.

This is a plain-English overview, not tax advice. Your licensed tax professional confirms every figure and eligibility rule against your records before filing.