Form 4137 does one job: it computes the 7.65% employee FICA share (6.2% Social Security + 1.45% Medicare) on tips that never ran through withholding — tips you didn't report to your employer, plus W-2 Box 8 allocated tips. Filling it out is mostly clerical: list each employer's EIN, put unreported tips on Line 2 and allocated tips on Line 3, pull your W-2 Box 3 and Box 7 wages, and let Lines 5–13 do the math. The result carries to Schedule 2 (Form 1040).
How to Fill Out Form 4137: Quick Answer
Form 4137 is an employee-only form — it never claims a credit, and employers never touch it. Attach it to your Form 1040 whenever (1) you have cash or charge tips you did not report to your employer, or (2) your W-2 shows an amount in Box 8 (Allocated tips). The form calculates Social Security tax (6.2%) and Medicare tax (1.45%) on those tips, and you pay the result with your income tax return by the April 15 filing deadline. The IRS explains the form at https://www.irs.gov/forms-pubs/about-form-4137 and the reporting rules in Publication 531 (https://www.irs.gov/publications/p531).
What Is Form 4137 and Who Needs It?
Form 4137 is titled "Social Security and Medicare Tax on Unreported Tip Income." The logic behind it is simple: tips that never pass through your employer's payroll never have FICA withheld, so the IRS collects the employee share (7.65% total: 6.2% Social Security plus 1.45% Medicare) through your annual return instead.
You need Form 4137 if any of these apply: (1) you received $20 or more in cash tips in a month from an employer and did not report them by the 10th of the following month; (2) you received tips after leaving an employer — say, a charge tip that settled on a card after your last shift; or (3) your W-2 Box 8 shows allocated tips. Employers allocate tips when total reported tips fall below 8% of gross receipts — a rule tied to Form 8027, which large food or beverage establishments file (see https://www.irs.gov/forms-pubs/about-form-8027). Allocated tips appear only in Box 8; they are not in Boxes 1, 3, 5, or 7 and nothing was withheld on them, so you generally must report them on Form 4137 unless adequate daily records show you actually received less.
Employers never use Form 4137. Their side of the tip world is Form 8027 (annual tip reporting for large food and beverage establishments) and Form 8846 (the FICA tip credit, claimed by food, beverage, and — for tax years beginning after 2024 — certain beauty service businesses; see https://www.irs.gov/forms-pubs/about-form-8846).
Step-by-Step: Filling Out Each Line of Form 4137
Step 1 (Line 1): List your employers
Enter each employer's name and Employer Identification Number (EIN) exactly as shown on your W-2. One column per employer. If you had three tipped jobs in 2025, you'll use three columns.
Step 2 (Lines 2–4): Enter unreported and allocated tips
On Line 2, enter the total cash and charge tips you received from that employer but never reported to them. "Cash tips" is broader than it sounds — it includes tips paid by credit/debit card, check, gift card, and payment apps. On Line 3, enter the allocated tips from W-2 Box 8 for that employer. Line 4 adds Lines 2 and 3 together.
Step 3 (Lines 5–8): Add your W-2 wage figures
Enter your W-2 Box 3 (Social Security wages) and Box 7 (Social Security tips) amounts. The form uses these to check how much of your tips falls under the Social Security wage base for the year. If your total already exceeds the wage base, the excess tips skip the 6.2% Social Security portion but still owe the 1.45% Medicare portion (2.35% on wages and tips above the $200,000 Additional Medicare Tax threshold).
Step 4 (Lines 9–13): Compute and carry the tax
The form applies 6.2% and 1.45% to the applicable tip amounts and totals the tax on Line 13. Carry that number to Schedule 2 (Form 1040), Part II. Separately, if your tips qualify for the No Tax on Tips deduction — up to $25,000 of qualified tips for tax years 2025 through 2028, claimed on Schedule 1-A — include those tips there as well. The deduction reduces income tax only; it does not reduce the FICA computed on Form 4137.
Worked example: $2,400 in unreported tips
Maya worked at one restaurant in 2025. Her W-2 shows Box 3 wages of $22,000 and Box 7 reported tips of $8,000. Her daily log shows she under-reported $2,400 in tips to her employer, and her W-2 Box 8 shows $600 in allocated tips. On Form 4137, she enters the employer's name and EIN on Line 1, $2,400 on Line 2, $600 on Line 3, and $3,000 on Line 4. Her Box 3 plus Box 7 total ($30,000) sits well under the Social Security wage base, so the entire $3,000 is subject to both taxes: 6.2% of $3,000 = $186, plus 1.45% of $3,000 = $43.50, for a total of $229.50 on Line 13. She carries $229.50 to Schedule 2 (Form 1040) and pays it with her return. If the $3,000 was all qualified tips in a Treasury-listed occupation, she could also deduct it on Schedule 1-A — but the $229.50 FICA still applies in full.
Form 4137 vs. Reporting Tips to Your Employer: What Goes Where
| Type of tips | Where they show up | Where you report them |
|---|---|---|
| Tips reported to employer by the 10th of the following month (if $20+ in a month) | W-2 Boxes 1, 5, and 7 | Nowhere extra — FICA was already withheld; do not re-report on Form 4137 |
| Tips never reported to the employer | Not on your W-2 | Form 4137, Lines 1–2, filed with Form 1040 |
| Allocated tips | W-2 Box 8 only | Form 4137, Line 3 — unless your daily records prove you received less |
| Tips received after leaving an employer | Not on your W-2 | Form 4137, Line 2 |
The monthly employer-reporting rule comes from Publication 531: when cash tips total $20 or more in a month from one employer, you must give the employer a signed written statement by the 10th of the following month. No specific form is required — Form 4070 is historical, so the "Form 4137 vs Form 4070" question has a simple answer: 4070 was the optional monthly report to your employer, while 4137 is the annual IRS form filed with your 1040. Fail to report tips to your employer and you risk a penalty of 50% of the Social Security and Medicare tax owed on those tips. One habit I picked up running payroll for a small bar: have employees snap a photo of their written tip report and text it to a manager before the 10th. It takes ten seconds, and that timestamped photo settles disputes about what was reported months later.
The No Tax on Tips deduction does not erase Form 4137 tax
- The $25,000 No Tax on Tips deduction (2025–2028, Schedule 1-A) reduces federal income tax only.
- FICA at 7.65% still applies to all tips, reported or unreported.
- The deduction requires a valid SSN, a Treasury-listed occupation, and joint filing if married.
- It phases out once MAGI exceeds $150,000 ($300,000 married filing jointly).
FAQ: Form 4137 Questions Servers and Bartenders Ask
What is Form 4137 used for?
It's the employee form "Social Security and Medicare Tax on Unreported Tip Income," attached to Form 1040. It computes the 7.65% employee FICA share (6.2% Social Security + 1.45% Medicare) on tips that never went through payroll withholding — unreported tips and W-2 Box 8 allocated tips. It never claims a credit.
Do I have to file Form 4137 for allocated tips if I actually received fewer than Box 8 shows?
No — but only if you have adequate daily records proving you received less. Keep a tip log with dates, amounts, and shifts. If your records are solid, report only what you actually received on Line 2 and leave Line 3 blank, and be ready to explain the difference from Box 8 if the IRS asks.
Does Form 4137 affect my No Tax on Tips deduction?
No. Qualified tips count toward the $25,000 deduction on Schedule 1-A even if you pay FICA on them through Form 4137. The deduction lowers income tax only; the 7.65% FICA on Line 13 still applies in full for 2025 through 2028.
Where do I get Form 4137 and when is it due?
Download it at https://www.irs.gov/forms-pubs/about-form-4137 or order it from the IRS by mail. File it with your Form 1040 by the April 15 filing deadline — or the next business day when April 15 falls on a Saturday, Sunday, or legal holiday.
Is Form 4137 the same as Form 4070?
No. Form 4070 was the optional monthly statement employees gave their employer to report tips — it's historical, and no specific form is required now. Form 4137 is the annual IRS form filed with your Form 1040 to pay the 7.65% FICA on tips your employer never withheld on.
Key Takeaways
Key takeaways
- File Form 4137 with your 1040 whenever you have unreported tips or W-2 Box 8 allocated tips.
- The form computes 7.65% FICA (6.2% + 1.45%) on Line 13 — it's a tax calculation, not a credit, and never an employer form.
- Report tips to your employer by the 10th of the following month when they total $20+ in a month to avoid the 50% FICA penalty.
- Log tips daily; your records are your defense against allocated tips and your proof for the $25,000 No Tax on Tips deduction on Schedule 1-A.