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

Information about Form 4137 and its instructions is at www.irs.gov/form4137.
▶ 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)

2013

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 2013. Add the
amounts from line 1, column (c) . . . . . . . . . . .
2
3 Total cash and charge tips you reported to your employer(s) in 2013. 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 . . . . . . . . . . . . . . . .

.

.
7

.

.

.

.

.

.

.

4
5
6

113,700 00

8 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 percent rate), see
instructions . . . . . . . . . . . . . . . . . .
8
9 Subtract line 8 from line 7. If line 8 is more than line 7, enter -0- . . . . . . . . . .
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.) . . . . .
For Paperwork Reduction Act Notice, see your tax return instructions.

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Cat. No. 12626C

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Form 4137 (2013)

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Form 4137 (2013)

INTENTIONALLY LEFT BLANK

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Form 4137 (2013)

General Instructions
Future developments. For the latest information about
developments related to Form 4137 and its instructions,
such as legislation enacted after this form and
instructions were published, go to www.irs.gov/form4137.

What's New
For 2013, the maximum wages and tips subject to social
security tax increased to $113,700. The social security tax
rate an employee must pay on tips is 6.2% (.062). For tax
years beginning after December 31, 2012, a 0.9%
Additional Medicare Tax applies to Medicare wages,
Railroad Retirement Tax Act compensation, and
self-employment income over a threshold amount based
on your filing status. Use Form 8959, Additional Medicare
Tax, to figure this tax. For more information on Additional
Medicare Tax, go to IRS.gov and enter “Additional
Medicare Tax” in the search box.
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, instead of Form W-2, Wage and Tax
CAUTION
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.
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 2013,
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 2013 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 2013 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 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 (credit and debit card charges) distributed to
you by your employer, and tips received from other

!
▲

employees under any tip-sharing arrangement. 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.
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 uncollected 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 6 of Form 1040-PR or 1040SS to find out how to report the tax due. Unlike the
uncollected portion of the regular (1.45%) Medicare tax,
the uncollected Additional Medicare Tax is not reported in
box 12 of Form W-2 with code B.
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, Medicare,
and Additional Medicare taxes 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. See Rev. Rul. 2012-18 for guidance for
employees in a question and answer format regarding
taxes imposed on tips, including information on 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/ar07.html.

Specific Instructions
Line 1. Complete a separate line for each employer. If
you had more than five employers in 2013, 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. Include your name, social security number,
and calendar year (2013) on the top of any attachment.

Form 4137 (2013)

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 2012 that you reported to
your employer after December 31, 2012, but by January
10, 2013, are considered income in 2013 and should be
included on your 2013 Form W-2 and reported on line 1
of Form 4137. However, tips you received in December
2013 that you reported to your employer after December
31, 2013, but by January 10, 2014, are considered
income in 2014. 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 2013 that you reported to your
employer after January 10, 2014, are considered income
in 2013 because you did not report them to your
employer on time.

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• 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 8. For railroad retirement (RRTA) compensation, do
not include an amount greater than $113,700, which is
the amount subject to the 6.2 percent rate for 2013.
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 .062 (the social
security rate for 2013).
Line 13. Form 1040-SS and Form 1040-PR filers, include
the amount from line 13 on line 6 of Form 1040-SS or
Form 1040-PR. See the instructions for Form 1040-SS or
Form 1040-PR for more information.