Fill out Form 4137 (Social Security and Medicare Tax on Unreported Tip Income) online
Form 4137 is used by employees who received tips but did not report all of them to their employer to calculate the Social Security and Medicare tax owed on those unreported tips. Tips are subject to FICA taxes regardless of whether they were reported to the employer.
How to fill out Form 4137 (Social Security and Medicare Tax on Unreported Tip Income)
Identify your tip income sources
List each employer from whom you received tip income during the year. Enter the employer name, employer identification number, and the total tips received while working for each employer.
Determine tips already reported to employers
Enter the amount of tips you reported to each employer (shown in Box 7 of your Form W-2). This is the portion on which your employer already withheld Social Security and Medicare taxes.
Calculate unreported tip income
Subtract tips reported to your employer from total tips received to determine the unreported tip amount. This is the amount subject to additional Social Security and Medicare tax.
Compute the Social Security and Medicare tax owed
Apply the current Social Security tax rate (6.2%) and Medicare tax rate (1.45%) to your unreported tips. Enter the total additional tax and carry it to Schedule 2 of Form 1040.
About Form 4137 (Social Security and Medicare Tax on Unreported Tip Income)
Who needs this form
Employees who received cash tips, credit card tips, or other tip income totaling $20 or more in any month and did not report the full amount to their employer. This commonly applies to restaurant workers, bartenders, hair stylists, and other service industry employees.
Where to submit
Attach Form 4137 to your Form 1040 or 1040-SR when filing your annual federal income tax return. The calculated Social Security and Medicare tax is added to your total tax on Form 1040.
Source and content freshness
- Reviewed: 2026-02-24
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Not reporting all tip income, including cash tips and tips from tip-sharing arrangements
- Confusing tips reported to the employer (on Form W-2) with tips not reported, leading to double-counting or under-reporting
- Forgetting that the $20 monthly threshold applies per employer, not in total
- Not including allocated tips shown in Box 8 of Form W-2 that represent actual unreported tips
Frequently asked questions
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What happens if I do not report my tip income?
Failure to report tip income can result in penalties of 50% of the Social Security and Medicare tax owed on the unreported tips, plus interest. Unreported tips also reduce your Social Security earnings record, which can lower your future Social Security benefits. The IRS may also assess additional income tax and accuracy-related penalties on the unreported income.
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