4137x -

: Tips under $20 in a month don't need to be reported to your employer, but they still must be included as income on your Form 1040 . Filing Mechanics

: 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 .

: Using IRS Form 4137 fulfills your legal responsibility to report all income and helps avoid IRS audits or penalties . Who Must File : Tips under $20 in a month don't

: Unreported income is not credited to your Social Security history, potentially lowering your future monthly benefit payments .

: 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 . Who Must File : Unreported income is not

: 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 .

: 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 . : The form applies a 6

: The completed form must be attached to your annual income tax return . The calculated tax is typically reported on Schedule 2 (Form 1040) . Consequences of Non-Compliance