Sometimes, you may receive tips for work or services you performed, but you don't report these to your employer. If you have such income, you are required to pay Social Security and Medicare taxes on that income.
Since you didn't report these tips to your employer, your employer couldn't withhold these taxes during the year. Therefore, you will have to include these taxes on your income tax return by filing Form 4137.
If you did not report tips to your employer as required, you may be charged a penalty equal to 50% of the Social Security and Medicare tax due on those tips. For more information, please review Publication 531.
By entering some basic information about your employer and the amount of tips received, the program will automatically fill in this form and calculate your taxes for you.
You can find this form by going to:
- Federal Section
- Enter Myself
- Other Taxes
- Tax on Unreported Tip Income (Form 4137).