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

Form 4137 is used to report certain unreported tip income and calculate applicable Social Security and Medicare taxes.

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Introduction

Form 4137, Social Security and Medicare Tax on Unreported Tip Income, is a federal tax form used by certain employees to report tips that were not properly reported to their employer. The form is generally used to calculate Social Security and Medicare taxes on applicable unreported tip income.

This guide provides general information about Form 4137, including who may use the form, the information commonly needed, and the basic process for completing it. The information is intended to provide a simple overview of Form 4137 and its general purpose.

What Is Form 4137?

Form 4137 is used to report certain tip income that was not reported to an employer and to calculate the applicable Social Security and Medicare taxes. The form is generally associated with employees who receive tips as part of their work.

Form 4137 commonly involves:

Unreported tip income
Cash tips
Tips received from customers
Social Security wages
Medicare wages
Social Security tax
Medicare tax
Employer-reported tip information
Applicable adjustments or calculations

The information reported on Form 4137 should generally be based on the employee’s tip records, wage records, and other applicable employment records.

Who Uses Form 4137?

Form 4137 is generally used by employees who received tips that were not reported to their employer as required. This may include employees in occupations where customers commonly provide tips for services.

Not every employee who receives tips needs to complete Form 4137. The form is generally relevant when applicable tip income was not properly reported to the employer. Employees should determine whether Form 4137 applies to their circumstances before completing the form.

What Information Is Needed?

The information needed to complete Form 4137 generally comes from the employee’s wage records, tip records, Form W-2, and other employment records. Accurate records can help determine the amount of unreported tip income and the applicable taxes.

Common information includes:

Employee name
Social Security number or other identifying information
Employer information
Total cash and other tips received
Tips reported to the employer
Tips included on wage records
Unreported tip income
Social Security wages
Medicare wages
Applicable Social Security tax
Applicable Medicare tax

The specific information required may depend on the employee’s circumstances and the type of tip income being reported.

How to Fill Out/Complete Form 4137

Form 4137 is generally completed by reviewing tip records, determining the amount of tips that were not reported to the employer, and calculating the applicable Social Security and Medicare taxes. The information should generally agree with the employee’s wage and tip records.

The basic process is to gather the required employment and tip information, enter the applicable amounts, calculate the unreported tip income and related taxes, and review the completed form before submitting it with the applicable tax return. Employees should keep supporting records for the information reported on the form.

Section 1

Enter the employee’s identifying information and applicable employment information. This generally includes information such as the employee’s name, identifying information, and employer information when required.

The information should be reviewed carefully to make sure it is accurate and consistent with the employee’s wage and employment records.

Section 2

Report the applicable tip income received during the reporting period. This generally includes tips received from customers or other sources that were subject to reporting requirements.

Employees should review their personal tip records and employment records before entering these amounts to help ensure that the information reported on Form 4137 is complete and accurate.

Section 3

Determine the amount of tips that were not reported to the employer. This generally involves comparing the total applicable tips received with the amount of tips already reported through the employer.

The calculation should be supported by the employee’s tip records and other available employment information. Employees should review the amounts carefully before continuing with the tax calculations.

Section 4

Calculate the applicable Social Security and Medicare taxes on the unreported tip income. The calculation generally uses the applicable unreported tip amount and the employment tax rules that apply.

Employees should review the calculations carefully and make sure the amounts are supported by their records and agree with the information reported on the form.

Section 5

Review any applicable wage and tax information used in determining the Social Security and Medicare tax amounts. This information may be compared with the employee’s wage records and applicable tax documents.

Employees should make sure the information used in the calculations is accurate and does not duplicate amounts that were already properly reported.

Section 6

Complete any applicable additional calculations or adjustments included on Form 4137. Only information that applies to the employee’s circumstances should generally be entered.

Supporting records should be maintained for any amounts used in the calculations. If a particular item does not apply, it generally should not be included simply to complete a section.

Section 7

Determine the final Social Security and Medicare tax amount resulting from the unreported tip income. The completed calculations should reflect the applicable taxes associated with the amount being reported.

Employees should compare the final figures with their tip, wage, and tax records before submitting the form. Any applicable amount should be reported according to the requirements that apply to the employee’s tax return.

Section 8

Review the completed Form 4137 and make sure all applicable information has been entered. Check the employee information, employer information, tip amounts, unreported tip income, wage information, tax calculations, and final amounts.

The form should be included with the applicable tax filing when required. Employees should also keep a copy of Form 4137 and supporting tip and employment records for their records.

Final Review

Review Form 4137 after completing all applicable sections. Check the employee information, employer information, reported tips, unreported tip income, Social Security wages, Medicare wages, tax calculations, and final amount.

A final review can help identify calculation or reporting errors before the form is submitted. Employees should retain Form 4137 and supporting tip, wage, and employment records with their tax records.

Common Mistakes

Common Form 4137 mistakes may include entering incorrect employee or employer information, reporting incorrect tip amounts, or failing to properly determine the amount of unreported tip income. Mathematical errors and incorrect Social Security or Medicare tax calculations can also create problems.

Other mistakes may include duplicating tips that were already reported, using information that does not agree with wage records, leaving required information incomplete, or submitting the form without reviewing it. Comparing Form 4137 with tip, wage, and employment records before filing can help identify potential errors.

Related IRS Forms

Employees and employers may encounter other federal tax forms when reporting wages, tips, and employment taxes. Different forms are used for employee wage reporting, employment tax reporting, and individual tax reporting.

Common related forms include:

Form 1040 for individual federal income tax reporting
Form W-2 for reporting employee wages and certain tax information
Form 941 for reporting quarterly employment taxes
Form 943 for reporting employment taxes related to agricultural employees
Form 944 for certain employers that report employment taxes annually
Form 4137 for reporting applicable unreported tip income and related employment taxes

The appropriate form depends on the individual’s or employer’s specific circumstances and the type of income or tax being reported.

Where to File or Submit

Form 4137 is generally submitted with the applicable individual federal income tax return when required. The appropriate filing method depends on the individual’s tax filing circumstances and the requirements that apply to the return.

Taxpayers should review the applicable filing requirements before submitting Form 4137. A copy of the completed form and supporting tip and employment records should generally be retained for the taxpayer’s records.

Current IRS Form & Instructions

Taxpayers should use the applicable version of Form 4137 and its instructions when preparing the form. Forms and requirements can change, so the version used should correspond with the reporting period being filed.

Before submitting Form 4137, review the form and instructions carefully and confirm that the information agrees with the taxpayer’s tip, wage, and employment records. This can help identify errors before the form is submitted.

Important Information / Disclaimer

This Form 4137 guide is provided for general informational purposes only and is intended to provide a basic overview of Form 4137 and common information associated with reporting unreported tip income and related employment taxes. This information is not tax, legal, accounting, or financial advice, and tax and employment requirements can vary depending on a taxpayer’s circumstances.

Taxpayers are responsible for determining their applicable filing, payment, recordkeeping, and reporting requirements, and information on this page may not cover every situation, exception, or special rule that may apply. When appropriate, taxpayers should consider seeking assistance from a qualified tax professional or other qualified advisor regarding their specific tax situation or Form 4137 filing requirements.