Social Security and Medicare Tax on Unreported Tip Income - Form 4137

Form 4137 is used to figure the social security and Medicare tax owed on tips you did not report to your employer or allocated tips shown on Form W-2 [Wage and Tax Statement].

The IRS requires you to report tips in excess of $20 to your employer on a monthly basis. Your employer will then subject those tips to social security and Medicare tax and income tax withholding. But if you didn’t report tips to your employer, you must file Form 4137 so the IRS can subject them to withholding.

Likewise, if box 8 on your W-2 shows allocated tips, you must also file a Form 4137. Though allocated tips are shown on your W-2, they are not included in the wages, tips, and other compensation box (box 1). Therefore, no income tax, social security tax, or Medicare tax has been withheld, making it necessary to report them on Form 4137.

Married couples should complete separate Form 4137s, one for each spouse’s unreported tips.

If you received a 1099-MISC [Miscellaneous Income] instead of a W-2 do not use this form. File Form 8919 [Uncollected Social Security and Medicare Tax on Wages] instead.