Form 4137 Social Security and Medicare Tax on Undereported Tip Inc

Form

4137

Department of the Treasury
Internal Revenue Service (99)

Social Security and Medicare Tax
on Unreported Tip Income

OMB No. 1545-0074

See instructions below and on back.
▶ Attach to Form 1040, Form 1040NR, Form 1040NR-EZ, Form 1040-SS, or Form 1040-PR.
▶

Social security number

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

1

(a) Name of employer to whom
you were required to, but did not
report all your tips (see instructions)

(b) Employer
identification number
(see instructions)

2010

Attachment
Sequence No. 24

(c) Total cash and charge
tips you received (including
unreported tips) (see instructions)

(d) Total cash and charge
tips you reported to your
employer

A
B
C
D
E
2 Total cash and charge tips you received in 2010. Add the
amounts from line 1, column (c) . . . . . . . . . . .
2
3 Total cash and charge tips you reported to your employer(s) in 2010. Add the amounts from
line 1, column (d) . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Subtract line 3 from line 2. This amount is income you must include in the total on Form 1040,
line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3 . . . . . . . . . . . . .
5 Cash and charge tips you received but did not report to your employer because the total was
less than $20 in a calendar month (see instructions). . . . . . . . . . . . . . .
6 Unreported tips subject to Medicare tax. Subtract line 5 from line 4
7 Maximum amount of wages (including tips) subject to
social security tax . . . . . . . . . . . . . . . .

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Purpose of form. Use Form 4137 only to figure the social
security and Medicare tax owed on tips you did not 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, line 7; Form 1040NR, line
8; or Form 1040NR-EZ, line 3. By filing this form, your social
security and Medicare tips will be credited to your social
security record (used to figure your benefits).

!
▲

If you believe you are an employee and you
received Form 1099-MISC, Miscellaneous Income,
CAUTION instead of Form W-2, Wage and Tax Statement,
because your employer did not consider you an
employee, do not 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.
For Paperwork Reduction Act Notice, see your tax return instructions.

4
5
6

106,800 00

8 Total social security wages and social security tips (total of boxes
3 and 7 shown on your Form(s) W-2) or railroad retirement (tier 1)
compensation . . . . . . . . . . . . . . . . .
8
9 Subtract line 8 from line 7. If line 8 is more than line 7, enter -0- here and on line 10 and go to
line 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 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 . . . . .
11 Multiply line 10 by .062 (social security tax rate) . . . . . . . . . . . . . . . .
12 Multiply line 6 by .0145 (Medicare tax rate). . . . . . . . . . . . . . . . . .
13 Add lines 11 and 12. Enter the result here and on Form 1040, line 57; Form 1040NR, line 55; or
Form 1040NR-EZ, line 16 (Form 1040-SS and 1040-PR filers, see instructions.) . . . . .

General Instructions

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10
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Who must file. You must file Form 4137 if you received cash
and charge tips of $20 or more in a calendar month and did
not report all of those tips to your employer. You must also
file Form 4137 if box 8 of your Form(s) W-2 shows allocated
tips that you must report as income.
Allocated tips. You must report as income on Form 1040,
line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3, at
least the amount of allocated tips shown in box 8 of your
Form(s) W-2 unless you can prove a smaller amount with
adequate records. If you have records that show the actual
amount of tips you received, report that amount even if it is
more or less than the allocated tips. Although allocated tips
are shown on your Form W-2, they are not included in the
wages, tips, and other compensation box (box 1) on that
form and no income tax, social security tax, or Medicare tax
has been withheld from these tips.

Cat. No. 12626C

Form 4137 (2010)

Form 4137 (2010)

Tips you must report to your employer. You must give
your employer a written report of cash and charge tips if you
received $20 or more in tips during a month. 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. Your reportable tips include cash tips
received from customers, charged tips distributed to you by
your employer, and tips received from other employees
under any tip-sharing arrangement. You must report your
tips to your employers 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.
Employees subject to the Railroad Retirement Tax Act.
Do not use Form 4137 to report tips received for work
covered by the Railroad Retirement Tax Act. In order 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) 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 were
not 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 was not enough money to cover the
social security and Medicare tax (or railroad retirement tax),
your Form W-2 will also show the tax due in box 12 with
codes A and B. See the instructions for Form 1040, line 60;
or Form 1040NR, line 59 to find out 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,
boxes 22 and 23, show the uncollected tax due. See the
instructions for line 5 of Form 1040-PR or 1040-SS to find
out how to report the tax due.
Penalty for not reporting tips. If you did not report tips to
your employer as required, you may be charged a penalty
equal to 50% of the social security and Medicare tax due on
those tips. You can avoid this penalty if you can show that
your failure to report tips to your employer was due to
reasonable cause and not due to willful neglect. To do so,
you can attach a statement to your return explaining why
you did not report them.
Additional information. See Pub. 531, Reporting Tip
Income.

Specific Instructions
Line 1. Complete a separate line for each employer. If you
had more than five employers in 2010, 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 statement.

Page 2

Column (a). Enter your employer’s name exactly as it is
entered in box c of your Form W-2.
Column (b). For each employer’s name you entered in
column (a), enter the employer identification number or the
words “applied for” exactly as shown in box b of your Form
W-2.
Column (c). Include all cash and charge tips you
received. This includes the following:
• Total tips you reported to your employer. 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 2009 that you reported to your employer after
December 31, 2009, but by January 11, 2010, are
considered income in 2010 and should be included on your
2010 Form W-2 and reported on line 1 of Form 4137.
However, tips you received in December 2010 that you
reported to your employer after December 31, 2010, but by
January 10, 2011, are considered income in 2011. Do not
include these tips on line 1.
• Tips you did not report to your employer on time or did not
report at all. These tips are considered income to you in the
month you actually received them. For example, tips you
received in December 2010 that you reported to your
employer after January 10, 2011, are considered income in
2010 because you did not report them to your employer on
time.
• Tips you received that you were not required to report to
your employer because they totaled less than $20 during the
month.
• Allocated tips you must report as income (see page 1).
Line 5. Enter only the tips you were not required to report to
your employer because the total received was less than $20
in a calendar month. These tips are not subject to social
security and Medicare tax.
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. Do not reduce the
actual entry on line 6. Enter “1.45% tips” and the amount
you subtracted on the dotted line next to line 10.
Line 13. Form 1040-SS and Form 1040-PR filers include the
amount on line 5. See the instructions for line 5 of the form
you file on how to report the tax due.