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

With service jobs often paying hourly, tax time can be a daunting challenge for employees. In order to pay your Social Security and Medicare taxes on tip income, you may need to file IRS Form 4137. This guide provides a step-by-step breakdown for how to file the form and pay taxes on your unreported income.

What is Form 4137?

IRS Form 4137 is used to report and pay Social Security and Medicare taxes on tips you received as an employee that were not reported to your employer, and to report any excess Social Security and Medicare taxes you had withheld from your wages. This form is part of a package that includes the form and its instructions. If applicable to you, you should file Form 4137 with your individual income tax return before the deadline without facing any late penalties. You must complete Form 4137 if you have unreported income from tips you received during the year, and you must pay taxes on tips you earned that amount to more than $20 in a single month. Filing this form is an important step in ensuring compliance with the law and avoiding any legal complications.

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IRS Form 4137 – Who Needs to Fill It Out?

IRS Form 4137 is used to report and pay Social Security and Medicare taxes on tips you did not report to your employer, and also to report any excess Social Security and Medicare taxes that were withheld from your wages. It must be completed if you received more than $20 in tips during the month and either you or your employer failed to report them properly. This form, as well as its instructions, can be found in the IRS package. Failure to report tips can result in a monetary penalty of 50% of the tax due on such tips, so it’s important to file 4137 alongside your individual income tax return by the April 15, 2021 deadline to stay compliant with the law.

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Step-by-Step: Form 4137 Instructions For Filling Out the Document

Form 4137 is used to report and pay Social Security and Medicare taxes on tips you received as an employee, as well as to report any excess Social Security and Medicare taxes that you had withheld from your wages. This form is a vital step in ensuring that service industry employees comply with federal laws—while filing it may be an inconvenience, it is important to complete Form 4137 in order for individuals not to face monetary penalties or find themselves caught up in legal troubles. To help guide you, step-by-step instructions are provided in this package, covering how to fill out lines 1 through 13, as well as how to report the total amount of taxes you owe on Form 1040. Remember that failure to report your tips not only results in paying taxes on the income, but also can have a legal consequence.

Below, we present a table that will help you understand how to fill out Form 4137.

Information Required for Form 4137 Details
Tip Reporting Report tips received as an employee
Excess Taxes Report excess Social Security and Medicare taxes withheld
Step-by-Step Instructions Follow the provided instructions for each line on the form
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Do You Need to File Form 4137 Each Year?

IRS Form 4137 is a tool necessary for anyone who works a service job and has received tips in the past year that were not reported to their employer. The form is used to report and pay Social Security and Medicare taxes on unreported tip income. It also reports any excess Social Security and Medicare taxes that may have been withheld from your wages. You must file IRS Form 4137 each year in conjunction with your federal income tax return. By not filing Form 4137, you are at risk of facing legal consequences and/or monetary penalties from the IRS. However, there is no requirement to file 4137 for tips that amount to less than $20 in a single month. Filing Form 4137, though, is a critical step to ensure compliance with the law.

Download the official IRS Form 4137 PDF

On the official IRS website, you will find a link to download Form 4137. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 4137

Sources:

https://www.irs.gov/forms-pubs/about-form-4137

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