Form 4137 Unreported Tips Calculator
Work out the Social Security and Medicare tax you owe on unreported cash tips and W-2 Box 8 allocated tips. See exactly what flows to Schedule 2, Line 6.
Tax Year
Picks the Social Security wage base used in the calculation.
Unreported Cash Tips
Cash and charge tips you did NOT report to your employer (Form 4137 line 4).
Allocated Tips (W-2 Box 8)
Tips your employer assigned to you in W-2 Box 8 (no FICA was withheld). If your records show your actual tips were less, enter that lower amount instead.
YTD Social Security Wages
From your W-2: Box 3 (Social Security wages) + Box 7 (Social Security tips). Tells the calculator how much wage-base room is left.
Filing Status
Only matters for the 0.9% Additional Medicare Tax threshold ($200,000 single, $250,000 MFJ).
Form 4137 Line-by-Line
Informational only, not tax advice. See the IRS Form 4137 instructions and IRS Publication 531 for the official rules.
What Form 4137 Is and Who Must File It
Form 4137 (Social Security and Medicare Tax on Unreported Tip Income) is how the IRS collects FICA on tip money that escaped payroll withholding. Most tipped workers never have to think about it. They report tips to their employer every month, FICA gets pulled from their regular paycheck, and that's the end of it. Form 4137 only enters the picture when something slipped through the cracks.
You generally need to file Form 4137 if either of these is true:
- You received $20 or more in tips in any single calendar month and didn't report them to your employer by the 10th of the following month, or
- Your W-2 has any amount in Box 8 (allocated tips) that you can't dispute with daily-tip records.
Common filers: servers, bartenders, valets, delivery drivers, hairstylists, hotel housekeepers, and taxi/rideshare workers. You attach Form 4137 to your Form 1040, the total tax flows to Schedule 2, Line 6, and it gets added to your overall tax bill. The form does not calculate income tax on the tips themselves; those amounts already show up on Form 1040 line 1c. It also doesn't replace Form 8959 if you cross the Additional Medicare threshold.
How the Form 4137 Tax Is Calculated, Step by Step
The math mirrors the line numbers on the form. Here's what the calculator above is doing under the hood, with a worked example:
Maria is a server. In 2025 she earned $42,000 in W-2 wages (Box 3 = $42,000). Her W-2 Box 8 shows $1,800 in allocated tips, and she also failed to report $600 in cash tips one busy December weekend.
- Combine tips for FICA: $1,800 + $600 = $2,400 (Form 4137 line 6).
- Find SS wage-base room: 2025 wage base $176,100 − $42,000 YTD = $134,100 remaining.
- Tips actually subject to SS: the smaller of $2,400 and $134,100 = $2,400.
- Social Security tax: $2,400 × 6.2% = $148.80.
- Medicare tax: $2,400 × 1.45% = $34.80.
- Additional Medicare: $0. Her combined Medicare wages ($44,400) are well below the $200,000 single threshold.
- Total Form 4137 tax: $148.80 + $34.80 + $0 = $183.60, which she enters on Schedule 2, Line 6.
The wage-base cap matters when you're a high earner. If Maria had already earned $175,000 in W-2 wages, only $1,100 of her tips would be subject to Social Security tax (the room left under the $176,100 cap). Medicare tax has no cap, so the full $2,400 still gets hit at 1.45%.
Allocated Tips (W-2 Box 8) and Form 4137
"Allocated tips" are tips your employer assigned to you when your reported total fell below 8% of food and drink sales at a large food-and-beverage establishment (IRC §6053(c)). You'll see them in Box 8 of your W-2, not Box 1 or Box 7. No FICA was withheld on those amounts, which is exactly why Form 4137 exists.
By default, you include the full Box 8 figure on Form 4137 line 4 along with any unreported cash tips. There's one exception: if you kept a daily tip log (Form 4070A or equivalent) showing your actual tips were lower than the allocated amount, you can use the lower figure and attach the records. Acceptable proof:
- Daily tip diary or log book
- POS / register tip-tracking reports
- Calendar with daily tip totals
If you don't have records, you're stuck with the Box 8 number. That's another reason to log tips daily even when the IRS never asks.
Reference Table: FICA Rates and SS Wage Base by Year
| Tax Year | SS Rate | SS Wage Base | Medicare Rate | Add'l Medicare | Add'l Med. Threshold (Single/HoH) |
|---|---|---|---|---|---|
| 2024 | 6.2% | $168,600 | 1.45% | 0.9% | $200,000 |
| 2025 | 6.2% | $176,100 | 1.45% | 0.9% | $200,000 |
| 2026 | 6.2% | $184,500 | 1.45% | 0.9% | $200,000 |
The 0.9% Additional Medicare Tax thresholds are statutory and not indexed for inflation. The MFJ threshold is $250,000 and MFS is $125,000 in all three years. Sources: SSA Contribution and Benefit Base; IRC §3101.
Disclaimer: This calculator is informational only and is not tax, legal, or accounting advice. For your filing, follow the official IRS Form 4137 instructions and IRS Publication 531 "Reporting Tip Income", or talk to a qualified tax professional.
Frequently Asked Questions
Common questions about form 4137 unreported tips calculator
What is IRS Form 4137 used for?
Form 4137 calculates Social Security and Medicare (FICA) tax on tips you didn't report to your employer, plus any allocated tips shown in Box 8 of your W-2. You file it with Form 1040, and the resulting tax flows to Schedule 2, Line 6.
When do I have to file Form 4137?
You must file if (a) you received $20 or more in tips in any single month and didn't report them to your employer by the 10th of the following month, or (b) your W-2 has any amount in Box 8 (allocated tips) that you don't have records to dispute.
Are allocated tips on Form W-2 (Box 8) included in Form 4137?
Yes. Allocated tips are tips your employer assigned to you (typically when reported tips are less than 8% of food/drink sales). No FICA was withheld on them, so they go on Form 4137 unless you have records proving you actually received less.
Does the "No Tax on Tips" deduction eliminate Form 4137 FICA tax?
No. The new §224 deduction (P.L. 119-21, effective 2025-2028) reduces your federal income tax on up to $25,000 of qualified tips. Social Security (6.2%) and Medicare (1.45%) taxes still apply in full to all tip income, including unreported tips on Form 4137.
What's the penalty for not filing Form 4137?
The IRS can assess a penalty equal to 50% of the Social Security, Medicare, and Additional Medicare taxes owed on the unreported tips (IRC §6652(b)). You can avoid it by attaching a statement showing reasonable cause and not willful neglect.
How does Form 4137 affect my Social Security earnings record?
Tips reported on Form 4137 get credited to your Social Security earnings record once the tax is paid, so they count toward your future retirement and disability benefits, just like reported wages.
Do I owe additional Medicare tax on Form 4137 tips?
Possibly. If your total Medicare wages (W-2 Box 5 + Form 4137 line 6) exceed $200,000 (single/HoH), $250,000 (MFJ), or $125,000 (MFS), you owe an extra 0.9% on the excess. You'll calculate this on Form 8959, which pulls from Form 4137 line 6.
Can my employer withhold Form 4137 tax from a paycheck?
No. By definition, Form 4137 covers tips your employer didn't know about, so no withholding occurred. You pay the full 7.65% (plus any 0.9% additional Medicare) yourself when you file your return. Consider increasing W-4 withholding or making estimated payments to avoid an underpayment penalty.