For hair, nail, esthetics and spa salons with stylists on payroll
A four-chair salon can claim back about $3,825 a year of the tax it pays on tips.
Since the 2025 tax year, beauty businesses get the FICA tip credit restaurants have had since 1993: the 7.65% employer social security and Medicare you pay on stylists' tips comes back as a credit on Form 8846.
The catch is paperwork. Your POS records card tips, your stylists keep the cash, payroll pays whatever it's told — and nobody adds it up by stylist and month the way the form needs. Tips that never reach payroll don't count at all.
One month at Studio Nine, the way Cape Ledger sees it
Fictional salon · example numbers- Oct 1
Each stylist gets their September statement link
No app, no password. Their card tips are already filled in from Square; they add cash and tip-outs, type their name, sign. It's the written report the IRS asks employees for by the 10th.
- Oct 8
A reminder goes to whoever hasn't signed
The 10th falls on a Saturday this year, so statements are due Monday, Oct 12. Late ones land in your inbox on the 13th.
- Any day
You upload the POS export
Tips by team member, straight from your POS. Automatic gratuities are marked as service charges and kept out — they're wages, not tips.
The mirrors · September 2026
STUDIO NINE
MONTHLY TIP REPORT · SEP 2026
Ana Rivera
EMPLOYEE COPY · NO SSN NEEDED
The foil bar: credit by month, 2026
$3,152.57 so far · estimate| Month | Tips | Creditable | Not on payroll | Estimated credit |
|---|---|---|---|---|
| January 2026 | $3,900.00 | $3,900.00 | $0.00 | $298.35 |
| February 2026 | $4,100.00 | $4,100.00 | $0.00 | $313.65 |
| March 2026 | $4,600.00 | $3,960.00 | $640.00 | $302.94 |
| April 2026 | $4,800.00 | $4,800.00 | $0.00 | $367.20 |
| May 2026 | $5,200.00 | $4,820.00 | $380.00 | $368.73 |
| June 2026 | $5,000.00 | $5,000.00 | $0.00 | $382.50 |
| July 2026 | $5,400.00 | $5,400.00 | $0.00 | $413.10 |
| August 2026 | $5,100.00 | $4,580.00 | $520.00 | $350.37 |
| September 2026 | $5,290.00 | $4,650.00 | $640.00 | $355.73 |
| October 2026 | no data | |||
| November 2026 | no data | |||
| December 2026 | no data |
Gray is money you paid out as tips that never went through payroll — so no FICA was paid on it and it earns no credit. September: $640 of tips not on payroll.
February
“My accountant asked for this.” One click.
The CPA package is a ZIP with every stylist-month as a spreadsheet, a Form 8846 worksheet (lines 1–4, month by month, the $7.25 line-2 math and the wage-base split) and every signed statement as a PDF. Or send a read-only link that expires in 30 days.
Missed 2025? The credit can be claimed on an amended return within three years. Upload last year's export and see the number.
Rent a booth, or work for yourself?
Hairstylists, barbers, nail techs and estheticians are on the IRS's proposed list of tipped occupations, so for 2025–2028 up to $25,000 of your tips can be deducted — if you can show which dollars were tips. Solo mode keeps them month by month and prints a year summary with your occupation code. $12/mo or $99/yr.
What Cape Ledger doesn't do
- It doesn't run payroll, pay out tips or touch card payments.
- It doesn't file anything with the IRS and it isn't tax advice. Every number is an estimate for your tax professional.
- It never asks anyone for a Social Security number.
- It doesn't replace your POS or booking app. It reads their exports.
Salon plan $49/month for up to 8 staff.
14 days free, no card. When the trial ends, everything stays viewable and exportable. All plans
Start with last month's tips