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
: 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 IRS is the tax document used to calculate
: 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 . such as $176