Form 4137 - Social Security and Medicare Tax On Unreported Tip Income (2014)

Form 4137 (2014)
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Who must file. You must file Form 4137 if
you received cash and charge tips of $20 or
more in a calendar month and did not report
all of those tips to your employer. You must
also file Form 4137 if your Form(s) W-2, box 8,
shows allocated tips that you must report as
income.
Allocated tips. You must report all your tips
from 2014, including both cash tips and
noncash tips, as income on Form 1040, line 7;
Form 1040NR, line 8; or Form 1040NR-EZ,
line 3. Any tips you reported to your employer
in 2014 are included in the wages shown on
your Form W-2, box 1. Add to the amount in
box 1 only the tips you received in 2014 and
did not report to your employer. This should
include any allocated tips shown on your
Form(s) W-2, box 8, unless you have
adequate records to show that your
unreported tips are less than the amount in
box 8. Although allocated tips are shown on
your Form W-2, they are not included in box 1
on that form and no tax is withheld from these
tips.
Tips you must report to your employer. You
must give your employer a written report of
cash and charge tips if you received $20 or
more in tips during a month. If, in any month,
you worked for two or more employers and
received tips while working for each, the $20
rule applies separately to the tips you
received while working for each employer and
not to the total you received. Your reportable
tips include cash tips received from
customers, charged tips (credit and debit card
charges) distributed to you by your employer,
and tips received from other employees under
any tip-sharing arrangement. You must report
your tips to your employer by the 10th day of
the month following the month you received
them. If the 10th day of the month falls on a
Saturday, Sunday, or legal holiday, give your
employer the report by the next business day.
Employees subject to the Railroad
Retirement Tax Act. Do not use Form 4137
to report tips received for work covered by
the Railroad Retirement Tax Act. To get
railroad retirement credit, you must report
these tips to your employer.
Payment of tax. Tips you reported to your
employer are subject to social security and
Medicare tax (or railroad retirement tax),
Additional Medicare Tax, and income tax
withholding. Your employer collects these
taxes from wages (excluding tips) or other
funds of yours available to cover them. If your
wages were not enough to cover these taxes,
you may have given your employer the
additional amounts needed. Your Form W-2
will include the tips you reported to your
employer and the taxes withheld. If there was
not enough money to cover the social security
and Medicare tax (or railroad retirement tax),
your Form W-2 will also show the uncollected
tax due in box 12 with codes A and B. See
the instructions for Form 1040, line 62, or
Form 1040NR, line 60, to find out how to
report the tax due. If you worked in American
Samoa, Guam, or the U.S. Virgin Islands, the
amount of uncollected tax due is identified in
box 12 on Form W-2AS, W-2GU, or W-2VI
with codes A and B. If you worked in Puerto
Rico, Form 499R-2/W-2PR, boxes 22 and 23,
show the uncollected tax due.Unlike the
uncollected portion of the regular (1.45%)
Medicare tax, the uncollected Additional
Medicare Tax is not reported on Form W-2,
box 12, with code B.
Penalty for not reporting tips. If you did not
report tips to your employer as required, you
may be charged a penalty equal to 50% of
the social security, Medicare, and Additional
Medicare Taxes due on those tips. You can
avoid this penalty if you can show (in a
statement attached to your return) that your
failure to report tips to your employer was due
to reasonable cause and not due to willful
neglect.
Additional information. See Pub. 531,
Reporting Tip Income. See Rev. Rul. 2012-18
for guidance on taxes imposed on tips, and
the difference between tips and service
charges. You can find Rev. Rul. 2012-18,
2012-26 I.R.B. 1032 at
www.irs.gov/irb/2012-26_IRB/ar07.html.
Specific Instructions
Line 1. Complete a separate line for each
employer. If you had more than five
employers in 2014, attach a statement that
contains all of the information (and in a similar
format) as required on Form 4137, line 1, or
complete and attach line 1 of additional Form
(s) 4137. Complete lines 2 through13 on only
one Form 4137. The line 2 and line 3 amounts
on that Form 4137 should be the combined
totals of all your Forms 4137 and attached
statements. Include your name, social
security number, and calendar year (2014) on
the top of any attachment.
Column (a). Enter your employer’s name
exactly as it is entered on your Form W-2, box
c.
Column (b). For each employer’s name you
entered in column (a), enter the employer
identification number or the words “Applied
For” exactly as shown on your Form W-2, box
c.
Column (c). Include all cash and charge
tips you received. This includes the following
tips.
• Total tips you reported to your employer on
time. Tips you reported, as required, by the
10th day of the month following the month
you received them are considered income in
the month you reported them. For example,
tips you received in December 2013 that you
reported to your employer after December 31,
2013, but by January 10, 2014, are
considered income in 2014 and should be
included on your 2014 Form W-2 and
reported on Form 4137, line 1. However, tips
you received in December 2014 that you
reported to your employer after December 31,
2014, but by January 10, 2015, are
considered income in 2015. Do not include
these tips on line 1.
• Tips you did not report to your employer on
time or did not report at all (include any
allocated tips shown in box 8 on your Form(s)
W-2 unless you can prove that your
unreported tips are less than the amount in
box 8). These tips are considered income to
you in the month you actually received them.
For example, tips you received in December
2014 that you reported to your employer after
January 10, 2015, are considered income in
2014 because you did not report them to your
employer on time.
• Tips you received that you were not
required to report to your employer because
they totaled less than $20 during the month.
• Allocated tips you must report as income
(see Allocated tips above).
Line 5. Enter only the tips you were not
required to report to your employer because
the total received was less than $20 in a
calendar month. These tips are not subject to
social security and Medicare tax.
Line 8. For railroad retirement (RRTA)
compensation, do not include an amount
greater than $117,000, which is the amount
subject to the 6.2% rate for 2014.
Line 10. If line 6 includes tips you received for
work you did as a federal, state, or local
government employee and your pay was
subject only to the 1.45% Medicare tax,
subtract the amount of those tips from the line
6 amount only for the purpose of comparing
lines 6 and 9. Do not reduce the actual entry
on line 6. Enter “1.45% tips” and the amount
you subtracted on the dotted line next to line
10.
Line 11. Multiply the amount on line 10
by .062 (the social security rate for 2014).
Line 13. Form 1040-SS and Form 1040-PR
filers, include the amount from line 13 on
Form 1040-SS or Form 1040-PR, line 6. See
the instructions for Form 1040-SS or Form
1040-PR for more information.
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