Updated October 19, 2026. Quick answer: Form 4137 figures social security and Medicare tax on tips that were not reported to an employer. A worker must file it after receiving cash and charge tips of $20 or more in a calendar month without reporting all of them, or if W-2 box 8 shows allocated tips to report as income. For 2025 the form prints a social security wage limit of $176,100, a 6.2% social security rate on tips and a 1.45% Medicare rate.
Quick reference
| Item | As the IRS form or instructions state it |
|---|---|
| Form and year read | Form 4137 for 2025, Social Security and Medicare Tax on Unreported Tip Income |
| Monthly filing trigger | “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.” |
| Social security wage limit for 2025 | “For 2025, the maximum wages and tips subject to social security tax increases to $176,100.” |
| Social security tax rate on tips | “The social security tax rate an employee must pay on tips remains at 6.2%.” |
| Medicare rate on line 12 | “Multiply line 6 by 0.0145 (Medicare tax rate)” |
| Reporting deadline to the employer | “You must report your tips to your employer by the 10th day of the month following the month you received them.” |
| Penalty for not reporting | “you may be charged a penalty equal to 50% of the social security, Medicare, and Additional Medicare Taxes due on those tips.” |
| Employers listed before a statement is attached | “If you had more than five employers in 2025, attach a statement” |
What Form 4137 is for and who files it
The form states its purpose in one sentence: “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.”
There are two triggers. “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.” The second is “You must also file Form 4137 if your Form(s) W-2, box 8, shows allocated tips that you must report as income.”
Filing has a benefit the form states directly: “By filing this form, your social security and Medicare tips will be credited to your social security record (used to figure your benefits).” It is not a substitute for a wage statement: “Don’t use Form 4137 as a substitute Form W-2.” For spouses, the name line says “If married, complete a separate Form 4137 for each spouse with unreported tips.”
When tips must be reported and when the form is filed
The form is attached to the return: “Attach to your tax return.” It prints no separate due date, so the return’s date applies. The earlier deadline is the one for reporting tips to the 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.”
The form gives the monthly deadline and the weekend rule: “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.”
What counts as a cash tip is defined broadly: “Cash tips include tips paid by cash, check, debit card, and credit card.” With several employers, “the $20 rule applies separately to the tips you received while working for each employer and not to the total you received.”
The lines of Form 4137, from tips received to tax owed
Line 1 is a table by employer. “Complete a separate row for each employer.” Line 2 totals the tips received, line 3 totals the tips reported to the employer, and line 4 is the difference. The form says to “Include as income on Form 1040, 1040-SR, or 1040-NR, line 1c.”
Line 5 removes small months: “These tips aren’t subject to social security and Medicare tax.” Line 6 is the Medicare base, and the instructions add “Enter this amount on Form 8959, line 2, if you’re required to file that form.”
Lines 7 through 10 compare against the wage limit. Line 7 prints 176,100. On line 8, for railroad retirement (RRTA) compensation, the instructions say “don’t include an amount greater than $176,100, which is the amount subject to the 6.2% rate for 2025.” Line 11 reads “Multiply line 10 by 0.062 (social security tax rate)” and line 12 reads “Multiply line 6 by 0.0145 (Medicare tax rate)”.
Line 13 adds lines 11 and 12 and carries the tax to the return: “Include as tax on Schedule 2 (Form 1040), line 5, or Form 1040-SS, Part I, line 6a.”
Allocated tips, timing and the penalty
Allocated tips appear in W-2 box 8: “Although allocated tips are shown on your Form W-2, box 8, they aren’t included in Form W-2, box 1, and no tax is withheld from these tips.” The instructions assume they are income “unless you have adequate records to show that your unreported tips are less than the amount in box 8.”
Timing follows when a report was made. “Tips reported late are included in gross income of the employee for the month and year earned and received.” By contrast, “Tips reported timely are included in gross income of the employee for the month and year in which the report is made.”
The penalty is stated in a plain sentence: “you may be charged a penalty equal to 50% of the social security, Medicare, and Additional Medicare Taxes due on those tips.” The form allows a defense: “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.”
Who should not use this form
Railroad workers are excluded: “Don’t use Form 4137 to report tips received for work covered by the Railroad Retirement Tax Act.”
A worker paid on a contractor form who believes they are an employee is sent to a different form: “Instead, use Form 8919, Uncollected Social Security and Medicare Tax on Wages.”
The form also notes a separate surtax: “A 0.9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income over a threshold amount based on your filing status.” Related pages cover Form 1040 line 1c and W-2 box 8 allocated tips.
Where this comes from
The edition read for this page is Form 4137 (2025), which is the revision irs.gov served when it was read on 2026-10-19; check the revision printed on the form you file, because a later revision can change the lines, the wage base and the rates. This page describes Form 4137 (2025), Social Security and Medicare Tax on Unreported Tip Income, as served on irs.gov on October 19, 2026. The IRS can revise a form after we read it, and the form you file and its own instructions control. Current and earlier revisions are listed on the IRS page Forms, Instructions and Publications. General information, not tax or legal advice.
Common mistakes
- Filing only when tips total a large amount. The form’s trigger is “cash and charge tips of $20 or more in a calendar month”.
- Treating the $20 test as one combined total. The form says “the $20 rule applies separately to the tips you received while working for each employer and not to the total you received.”
- Assuming W-2 box 8 tips are already taxed. The form says “no tax is withheld from these tips.”
- Using Form 4137 for railroad work. The form says “Don’t use Form 4137 to report tips received for work covered by the Railroad Retirement Tax Act.”
Related: Form 1040 line 1c unreported tip income, W-2 box 8 allocated tips, W-2 box 7 social security tips, Form 8959, Form 8919, and Schedule 2.
Sources
- Form 4137 (2025), Social Security and Medicare Tax on Unreported Tip Income: https://www.irs.gov/pub/irs-pdf/f4137.pdf
Read from the IRS pages linked above on October 19, 2026. General information, not tax or legal advice. The IRS form and the instructions for your own form control, and your own facts decide the outcome.