IRS Form 4137

irs form 4137
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Some citizens get their primary income not from hourly wages or salaries but from tips. These amounts often exceed hourly wages and should also be subject to taxation. If you belong to this social category, you should learn about Form 4137.

Often, the managers ask the workers who get significant income share in tips to indicate their total monthly amounts because they are expected to withhold taxes from it (for Medicare and Social Security purposes, for instance). If you do not report your monthly income from tips, you will need to fill out and submit Form 4137 to the Federal Revenue Service.

Using this report, the employer executes an estimation of the additional tax assigned for unregistered income, in this case, from the tips.

Tip Income Taxation Rules

Typically, those groups of citizens who get tips (waiters, beauty salon workers, gas station workers, and others) receive hourly wages in addition to tips. The employer withholds taxes from the wages and the tips you report to them.

But often the tips are so impressive that they exceed the salary. In this case, it is required to pay the difference in tax from tips.

Who Can Use the Form?

This form must be submitted by employees who are tipped and have not informed their management about it. There are several features to this rule:

  • You should be getting more than $20 in tip a month.
  • Tips are considered income if you are working for one organization. That is, if you work in several places, then the threshold of $20 must be exceeded in each place separately.

You must inform about earned tips your company on the 10th of each month following the month you got the tip.

The paper under review is used to report any tip income that appears in box 8 of your Form W-2. If the tip income taxes have not been withheld in the current financial period yet, you must complete this form if you:

  • Work in a catering and beverage establishment;
  • Get tips regularly from customers or a fraction of the total tips of employees.

It is highly recommended to keep a daily record of your tips so that if there is any disagreement in the data submitted by you and your employer, you can have your notes and be able to present them.

Where to Get the Current Form

We recommend using our form-building software and developments to get the relevant form template and edit it online by inserting the necessary information. But you can also refer to the official IRS website.

How to Fill out IRS Form 4137

We have outlined an illustrated form compilation guide for you to make the filing process a bit easier. Please refer to it below.

Enter Your Details

Start filling out the form by filling in your full name and Number of Social Security.

step 1 - enter your details - filling out irs form 4137

Fill in the Tip Information

If you work for several companies, then the data on each must be provided separately.

You must specify the following data:

  • The name of the company;
  • EIN as indicated in your W-2 Form;
  • Total tips both reported and unreported.

step 2 - fill in the tip information - filling out irs form 4137

List All Tips For 2019

You need to add up all tips earned in 2019. This should include tips:

  • Accepted in cash;
  • Received on bank cards;
  • Less than the $20 per month threshold;
  • Which you informed and did not report to your boss;
  • Allocated ones from the W-2 form.

step 3 - list all tips for 2019 - filling out irs form 4137

Enter the Tip Amount Reported to the Employer

You can rewrite the number from your W-2.

step 4 - enter the tip amount reported to the employer - filling out irs form 4137

Calculate the Sum of Additional Tips

Following the instructions for calculations, you will receive the amount for which you must calculate taxes.

step 5 - calculate the sum of additional tips - filling out irs form 4137

Get the Sum That Is Subject to Medicare Tax

On point 5, enter the tip amount that was less than $20 per month. Then subtract the metrics as written on line 6 and write down the result.

Point 7 is already filled in; you do not need to touch or change it.

step 6 - get the sum that is subject to medicare tax - filling out irs form 4137

Get the Amount That is Subject to Social Security Tax

Enter in point 8 the result of the addition of all wages you specified in W-2.

Enter in point 9 the result obtained by subtracting the indicated values. If you get a negative number, then write in zero. Then compare the indicators from points 6 and 9, and you should enter the lower number in point 10.

step 7 - get the amount that is subject to social security tax - filling out irs form 4137

Get Tax Amounts

By following the instructions on points 11 and 12, you will receive the exact tax amounts. On point 13, you will receive additional taxes, which must be reported on the rest of the documents.

step 8 - get tax amounts - filling out irs form 4137

Frequently Asked Questions

What Happens If You Do Not Provide Reliable Information?

It is very important to provide accurate information about your income, including tips. Some people may think that it is enough to simply hide the tip literally in your pocket because it is usually cash. But this is not the case. The IRS can check. For example, check your bank accounts for the arrival of money. Or compare the data you show with the data of your colleagues. They may have questions, and in this case, it will be very difficult to avoid fines.