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.
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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)

2011

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 2011. Add the
amounts from line 1, column (c) . . . . . . . . . . .
2
3 Total cash and charge tips you reported to your employer(s) in 2011. 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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7

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11 Multiply line 10 by .042 (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.) . . . . .

What's New
The social security tax rate an employee must pay on tips is
changed from .062 to .042. This rate applies to calendar year
2011 only.
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).

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CAUTION

If you believe you are an employee and you received
Form 1099-MISC, Miscellaneous Income, instead of
Form W-2, Wage and Tax Statement, because your
employer did not consider you an employee, do not

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 . . . . .

General Instructions

3

9
10
11
12
13

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 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 all your tips from 2011,
including both cash tips and noncash tips, as income on Form
1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3.
Any tips you reported to your employer in 2011 are included in
the wages shown in box 1 of your Form W-2. Add to the amount
in box 1 only the tips you received in 2011 and did not report to
your employer. This should include any allocated tips shown in
box 8 on your Form(s) W-2, unless you have adequate records
to show that your unreported tips are less than the amount in

Cat. No. 12626C

Form 4137 (2011)

Form 4137 (2011)

box 8. 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.
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 2011, 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 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 2010 that you reported to your employer after
December 31, 2010, but by January 10, 2011, are considered
income in 2011 and should be included on your 2011 Form W-2
and reported on line 1 of Form 4137. However, tips you received
in December 2011 that you reported to your employer after
December 31, 2011, but by January 10, 2012, are considered
income in 2012. Do not include these tips on line 1.
• Tips you did not report to your employer on time or did not
report at all. This should include any allocated tips 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. Tips you did
not report to your employer on time or did not report at all are
considered income to you in the month you actually received
them. For example, tips you received in December 2011 that
you reported to your employer after January 10, 2012, are
considered income in 2011 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 11. Multiply the amount on line 10 by .042 (the social
security rate). This rate applies to 2011 only.
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.