Understanding Form 4137: Tax on Unreported Tip Income for Tipped Workers
Small-Business Columnist · 6/11/2026
To determine if you need to file Form 4137, consider the following example: Let's say you're a server who receives $10,000 in tips during the year, but you only report $5,000 on your tax return. You'll need to file Form 4137 to report and pay the tax on the unreported $5,000 in tips. Similarly, if your employer fails to report your tips on your W-2 form, you may need to file Form 4137 to report and pay the tax on these earnings.
Who Needs to File Form 4137?
Tipped workers who have not reported all their tips on their tax return may need to file Form 4137. This includes workers who receive tips as part of their job, such as servers, bartenders, and hairdressers. Employers who fail to report employee tips on the employee's W-2 form may also be required to file Form 4137.
The IRS provides guidance on W-2 reporting through the IRS website (https://www.irs.gov/forms-pubs/about-form-w-2). If you're unsure about the requirements of Form 4137 or W-2 reporting, it's essential to consult the IRS website or seek advice from a tax professional.
Frequently Asked Questions (FAQs)
What happens if I don't file Form 4137?
If you don't file Form 4137, you may be subject to penalties and interest on the unreported tip income.
Can I file Form 4137 if I've already filed my tax return?
Yes, you can file Form 4137 at any time, even if you've already filed your tax return.
Do I need to file Form 4137 if my employer has already reported my tips on my W-2 form?
No, you do not need to file Form 4137 if your employer has already reported your tips on your W-2 form.
Key Takeaways
Key Takeaways
- Form 4137 is used to report and pay tax on unreported tip income.
- Tipped workers and employers who fail to report employee tips may need to file Form 4137.
- Filing Form 4137 can help avoid penalties and interest on unreported tip income.