Federal Social Security and Medicare Tax on Unreported Tip Income

Social Security and Medicare Tax on Unreported Tip Income
2023 Form 4137
Form

4137

Department of the Treasury
Internal Revenue Service

Social Security and Medicare Tax
on Unreported Tip Income

2023

Attach to your tax return.
Go to www.irs.gov/Form4137 for the latest information.

Name of person who received tips. If married, complete a separate Form 4137 for each spouse with unreported tips.

1

OMB No. 1545-0074

(a) Name of employer to whom you were required to
but didn’t report all your tips (see instructions)

(b) Employer
identification number
(see instructions)

Attachment
Sequence No. 24
Social security number

(c) Total cash and
(d) Total cash and
charge tips you received charge tips you reported
(including unreported tips)
to your employer
(see instructions)

A
B
C
D
E
2
3
4
5
6
7
8

9
10
11
12
13

Total cash and charge tips you received in 2023. Add the amounts from line 1,
column (c)
. . . . . . . . . . . . . . . . . . . . . .
2
Total cash and charge tips you reported to your employer(s) in 2023. Add the amounts from line 1,
column (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 3 from line 2. You must include this amount on line 1c of Form 1040, 1040-SR, or 1040-NR.
See Allocated tips on page 2 . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and charge tips you received but didn’t report to your employer because the total was less than
$20 in a calendar month (see instructions) . . . . . . . . . . . . . . . . . . . .
Unreported tips subject to Medicare tax. Subtract line 5 from line 4 . . . . . . . . . . . .
Maximum amount of wages (including tips) subject to social security tax . .
7
160,200
Total social security wages and social security tips (total of boxes 3 and 7
shown on your Form(s) W-2) and railroad retirement (RRTA) compensation
(subject to 6.2% rate) (see instructions) . . . . . . . . . . . . .
8
Subtract line 8 from line 7. If line 8 is more than line 7, enter -0- . . . . . . . . . . . . .
Unreported tips subject to social security tax. Enter the smaller of line 6 or line 9. If you received tips
as a federal, state, or local government employee, see instructions . . . . . . . . . . . .
Multiply line 10 by 0.062 (social security tax rate) . . . . . . . . . . . . . . . . . .
Multiply line 6 by 0.0145 (Medicare tax rate) . . . . . . . . . . . . . . . . . . .
Add lines 11 and 12. Enter here and include as tax on Schedule 2 (Form 1040), line 5; Form 1040-SS
(sp), Part I, line 6; or Form 1040-SS, Part I, line 6. See your tax return instructions . . . . . . .

General Instructions
Future Developments
For the latest information about developments related to Form
4137 and its instructions, such as legislation enacted after they
were published, go to www.irs.gov/Form4137.

What’s New
For 2023, the maximum wages and tips subject to social
security tax increases to $160,200. The social security tax rate
an employee must pay on tips remains at 6.2%.

Reminder
A 0.9% Additional Medicare Tax applies to Medicare wages,
Railroad Retirement Tax Act (RRTA) compensation, and selfemployment income over a threshold amount based on your
filing status. Use Form 8959, Additional Medicare Tax, to figure
this tax. See the Instructions for Form 8959 for more information
on the Additional Medicare Tax.

For Paperwork Reduction Act Notice, see your tax return instructions.

3
4
5
6

9
10
11
12
13

Purpose of form. Use Form 4137 only to figure the social
security and Medicare tax owed on tips you didn’t report to your
employer, including any allocated tips shown on your Form(s)
W-2 that you must report as income. You must also report the
income on Form 1040, 1040-SR, or 1040-NR, line 1c. By filing
this form, your social security and Medicare tips will be credited
to your social security record (used to figure your benefits).
Don’t use Form 4137 as a substitute Form W-2.
If you believe you’re an employee and you received
Form 1099-MISC, Miscellaneous Information, or Form
1099-NEC, Nonemployee Compensation, instead of
CAUTION Form W-2, Wage and Tax Statement, because your
employer didn’t consider you an employee, don’t use this form
to report the social security and Medicare tax on that income.
Instead, use Form 8919, Uncollected Social Security and
Medicare Tax on Wages.
Who must file. You must file Form 4137 if you received cash
and charge tips of $20 or more in a calendar month and didn’t
report all of those tips to your employer. You must also file Form
4137 if your Form(s) W-2, box 8, shows allocated tips that you
must report as income.

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Cat. No. 12626C

Form 4137 (2023)

Page 2

Form 4137 (2023)

Allocated tips. You must report all your tips from 2023,
including both cash tips and noncash tips, as income on Form
1040, 1040-SR, or 1040-NR. Any tips you reported to your
employer in 2023 are included in the wages shown on your
Form W-2, box 1. Enter on Form 1040, 1040-SR, or 1040-NR,
line 1c, only the tips you received in 2023 and didn’t report to
your employer. This should include any allocated tips shown on
your Form(s) W-2, box 8, unless you have adequate records to
show that your unreported tips are less than the amount in box
8. Although allocated tips are shown on your Form W-2, they
aren’t included in box 1 on that form and no tax is withheld from
these tips.
Tips you must report to your employer. If you receive $20 or
more in cash tips (defined next), you must report 100% of those
tips to your employer through a written report. Cash tips include
tips paid by cash, check, debit card, and credit card. The
written report should include tips your employer paid to you for
charge customers, tips you received directly from customers,
and tips you received from other employees under any tipsharing arrangement. If, in any month, you worked for two or
more employers and received tips while working for each, the
$20 rule applies separately to the tips you received while
working for each employer and not to the total you received.
You must report your tips to your employer by the 10th day of
the month following the month you received them. If the 10th
day of the month falls on a Saturday, Sunday, or legal holiday,
give your employer the report by the next business day. For
example, because August 10, 2024, is a Saturday, you must
report your tips received in July 2024 by August 12, 2024.
Employees subject to the Railroad Retirement Tax Act. Don’t
use Form 4137 to report tips received for work covered by the
Railroad Retirement Tax Act. To get railroad retirement credit,
you must report these tips to your employer.
Payment of tax. Tips you reported to your employer are subject
to social security and Medicare tax (or railroad retirement tax),
Additional Medicare Tax, and income tax withholding. Your
employer collects these taxes from wages (excluding tips) or
other funds of yours available to cover them. If your wages
weren’t enough to cover these taxes, you may have given your
employer the additional amounts needed. Your Form W-2 will
include the tips you reported to your employer and the taxes
withheld. If there wasn’t enough money to cover the social
security and Medicare tax (or railroad retirement tax), your Form
W-2 will also show the uncollected tax due in box 12 with codes
A and B. See the instructions for Schedule 2 (Form 1040), line
13, to see how to report the tax due. If you worked in American
Samoa, Guam, or the U.S. Virgin Islands, the amount of
uncollected tax due is identified in box 12 on Form W-2AS,
W-2GU, or W-2VI with codes A and B. If you worked in Puerto
Rico, Form 499R-2/W-2PR shows the uncollected tax due in the
boxes for “Seguro Social no Retenido en Propinas - Uncollected
Social Security Tax on Tips” and “Contrib. Medicare no
Retenida en Propinas - Uncollected Medicare Tax on Tips.”
Unlike the uncollected portion of the regular (1.45%) Medicare
tax, the uncollected Additional Medicare Tax isn’t reported on
Form W-2, box 12, with code B.
Penalty for not reporting tips. If you didn’t report tips to your
employer as required, you may be charged a penalty equal to
50% of the social security, Medicare, and Additional Medicare
Taxes due on those tips. You can avoid this penalty if you can
show (in a statement attached to your return) that your failure to
report tips to your employer was due to reasonable cause and
not due to willful neglect.
Additional information. See Pub. 531, Reporting Tip Income.
See Rev. Rul. 2012-18 for guidance on taxes imposed on tips
and the difference between tips and service charges. You can
find Rev. Rul. 2012-18, 2012-26 I.R.B. 1032, at
www.irs.gov/irb/2012-26_IRB#RR-2012-18.

Specific Instructions
Line 1. Complete a separate row for each employer. If you had
more than five employers in 2023, attach a statement that
contains all of the information (and in a similar format) as
required on Form 4137, line 1, or complete and attach line 1 of
additional Form(s) 4137. Complete lines 2 through 13 on only
one Form 4137. The line 2 and line 3 amounts on that Form
4137 should be the combined totals of all your Forms 4137 and
attached statements. Include your name, social security
number, and calendar year (2023) on the top of any attachment.
Column (a). Enter your employer’s name exactly as shown on
your Form W-2.
Column (b). For each employer’s name you entered in column
(a), enter the employer identification number (EIN) or the words
“Applied For” exactly as shown on your Form W-2.
Columns (c) and (d). Include all cash and charge tips you
received. All of the following tips must be included.
• Total tips you reported to your employer on time. Tips you
reported, as required, by the 10th day of the month following the
month you received them are considered income in the month
you reported them. For example, tips you received in December
2022 that you reported to your employer after December 31,
2022, but by January 10, 2023, are considered income in 2023
and should be included on your 2023 Form W-2 and reported on
Form 4137, line 1. Report these tips in column (d).
• Tips you received in December 2023 that you reported to
your employer after December 31, 2023, but by January 10,
2024, are considered income in 2024. Don’t include these tips
on line 1 for 2023. Instead, report these tips on line 1, column
(d), on your 2024 Form 4137.
• Tips you didn’t report to your employer on time. Report these
tips in column (d). For example, tips you received in December
2023 that you reported to your employer after January 10, 2024,
are considered income in 2023 because you didn’t report them
to your employer on time.
• Tips you didn’t report at all (include any allocated tips (see
Allocated tips, earlier) shown in box 8 on your Form(s) W-2
unless you can prove that your unreported tips are less than the
amount in box 8). Report these tips in column (c). These tips are
considered income to you in the month you actually received
them.
• Tips you received that you weren’t required to report to your
employer because they totaled less than $20 during the month.
Report these tips in column (c).
Line 5. Enter only the tips you weren’t required to report to your
employer because the total received was less than $20 in a
calendar month. These tips aren’t subject to social security and
Medicare tax.
Line 6. Enter this amount on Form 8959, line 2, if you’re
required to file that form.
Line 8. For railroad retirement (RRTA) compensation, don’t
include an amount greater than $160,200, which is the amount
subject to the 6.2% rate for 2023.
Line 10. If line 6 includes tips you received for work you did as a
federal, state, or local government employee and your pay was
subject only to the 1.45% Medicare tax, subtract the amount of
those tips from the line 6 amount only for the purpose of
comparing lines 6 and 9. Don’t reduce the actual entry on line 6.
Enter “1.45% tips” and the amount you subtracted on the
dotted line next to line 10.