How to Report Pooled Tips on Your Tax Return
Small-Business Columnist · 9/19/2026
Can I claim the No Tax on Tips deduction if I have unreported tip income? No, you must report and pay the tax on unreported income before claiming the deduction. You can file Form 4137 to report and pay the tax on unreported income, and then claim the No Tax on Tips deduction on Schedule 1 (Form 1040) if you meet the income and tip limits. For tax years 2025-2028, the No Tax on Tips deduction caps at $25,000 of qualified tips per year and phases out above $150,000 Modified Adjusted Gross Income (MAGI) ($300,000 married filing jointly). See Publication 531, Reporting Tip Income, at https://www.irs.gov/forms-pubs/about-publication-531 for more information.
Reporting Pooled Tips
To report pooled tips on your tax return, follow these steps: you can report your pooled tips on Form 4137, Statement of Social Security and Medicare Tax and Wage Worksheet, or claim the No Tax on Tips deduction on Schedule 1 (Form 1040). If you have unreported tip income, you may need to file Form 4137 to report and pay the tax. The deadline to report pooled tips is typically April 15th of the following year. For more information on tax reporting for tipped employees, visit the IRS website at https://www.irs.gov/tax-tips-for-tipped-employees.
- Gather your Form W-2 and calculate your total qualified tips by adding up all your tips received from each employer.
- Compare your total qualified tips to the $25,000 annual limit for the No Tax on Tips deduction.
- Report tips of $20+ per month per employer to your employer, as required by the IRS.
For example, let's say you have two employers, and you received $10,000 in tips from one employer and $8,000 in tips from the other employer. Your total qualified tips would be $18,000, which is below the $25,000 annual limit. You can claim the No Tax on Tips deduction on Schedule 1 (Form 1040) if you meet the income and tip limits.
Calculating Your Pooled Tips
To calculate your pooled tips, you'll need to gather your Form W-2, which should include your total tips reported by your employer in Box 14b. You'll also need to calculate your total qualified tips by adding up all your tips received from each employer. The total tips reported in Box 14b may include tips from other employers, so be sure to review your Form W-2 carefully. The No Tax on Tips deduction reduces federal income tax only - FICA (7.65%) still applies to tips.
- Gather your Form W-2 and calculate your total qualified tips by adding up all your tips received from each employer.
- Compare your total qualified tips to the $25,000 annual limit for the No Tax on Tips deduction.
- Note that the No Tax on Tips deduction phases out above $150,000 MAGI ($300,000 married filing jointly).
Filing Form 4137
If you choose to report your pooled tips on Form 4137, you'll need to file the form and pay the tax on unreported income. For more information on Form 4137, see About Form 4137, Statement of Social Security and Medicare Tax and Wage Worksheet, at https://www.irs.gov/forms-pubs/about-form-4137.
- Report your pooled tips on Form 4137 and pay the tax on unreported income.
- File Form 4137 by the deadline, typically April 15th of the following year.
Comparing Reporting Options
You can report your pooled tips on Form 4137 or claim the No Tax on Tips deduction on Schedule 1 (Form 1040). If you choose to report your tips, you'll need to file Form 4137 and pay the tax on unreported income. If you choose the No Tax on Tips deduction, you'll need to meet the income and tip limits to qualify. The FICA tip credit may also be available to employers who report and pay FICA taxes on tips.
| Form | Description |
|---|---|
| Form 4137 | Statement of Social Security and Medicare Tax and Wage Worksheet |
| Schedule 1 (Form 1040) | Additional Income and Adjustments to Income |
Key Takeaways
Key Takeaways
- Report pooled tips on Form 4137 or claim the No Tax on Tips deduction on Schedule 1 (Form 1040).
- Calculate your total qualified tips and compare to the $25,000 annual limit.
- Meet the income and tip limits to qualify for the No Tax on Tips deduction.
What is the deadline to report pooled tips?
The deadline to report pooled tips is typically April 15th of the following year. You can file Form 4137 to report and pay the tax on unreported income by this deadline.
Can I claim the No Tax on Tips deduction if I have unreported tip income?
No, you'll need to report and pay the tax on unreported income before claiming the deduction. You can file Form 4137 to report and pay the tax on unreported income, and then claim the No Tax on Tips deduction on Schedule 1 (Form 1040) if you meet the income and tip limits.
How do I report pooled tips on my tax return?
You can report your pooled tips on Form 4137 or claim the No Tax on Tips deduction on Schedule 1 (Form 1040). If you have unreported tip income, you may need to file Form 4137 to report and pay the tax. For more information on tax reporting for tipped employees, visit the IRS website at https://www.irs.gov/tax-tips-for-tipped-employees.