: If your W-2 Wage and Tax Statement shows an amount in Box 8 (allocated tips), you must report this as income on your 1040 and use Form 4137 unless you have adequate records proving you received less .
: You must maintain a daily tip log or other adequate records to support the figures reported on the form .
For more specific guidance, you can review IRS Publication 531 on reporting tip income . : If your W-2 Wage and Tax Statement
: Failure to report required tips to your employer can lead to a penalty equal to 50% of the Social Security and Medicare taxes due on those tips .
: It determines the employee's share of FICA (Social Security and Medicare) taxes on tips that weren't taxed during the year . : Failure to report required tips to your
IRS is the tax document used to calculate and report the Social Security and Medicare taxes owed on unreported tip income . This includes cash tips, noncash tips, and "allocated tips" shown in Box 8 of your Form W-2 that were not previously reported to your employer . Core Purpose of Form 4137
: The form applies a 6.2% Social Security tax (up to a wage limit, such as $176,100 for 2025) and a 1.45% Medicare tax on every dollar of unreported tips . This includes cash tips, noncash tips, and "allocated
: If you received $20 or more in cash and charge tips in any calendar month and did not report the full amount to your employer .
