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Social Security and Medicare Tax on Tip Income

 
When to report additional social security and Medicare taxes?

If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to our employer, you must report the social security and Medicare taxes on the unreported tips as additional tax on your tax return.

How to report taxes on unreported tip income?

To report these taxes, you must file a tax return even if you would not otherwise have to file the tax return. You must use the Form 1040 (not Form 1040A or 1040EZ).

 
Tax Form 4137

You use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure these taxes. Enter the tax on line 59 of Form 1040 and attach Form 4137 to your tax return.

Included, as part of Form 4137, is Schedule U, US Schedule of Unreported Tip Income, which is used to report your additional income to the Social Security Administration. This will be used at a later date in determining your benefits.

 
Uncollected taxes on W-2 form

If your employer could not collect all the social security and Medicare taxes (or railroad retirement tax) you owe on tips reported to your employer, the uncollected taxes will be shown in box 12 of your W-2 form. You must report these amounts as additional tax on your return. You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes.

You must file a tax return even if you would not otherwise have to file. You must use Form 1040. Include the taxes in your total tax amount on line 63 of Form 1040 and write "UT" and the total of the uncollected taxes on the dotted line next to line 63.


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