For 2021, the maximum wages and tips subject to social security tax increases to $142,800. The social security tax rate an employee must pay on tips remains at 6.2%.
Reminder A 0.9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act compensation, and selfemployment income over a threshold amount based on your filing status. Use Form 8959, Additional Medicare Tax, to figure this tax. For more information on the Additional Medicare Tax, see “What is the Additional Medicare Tax?” at www.irs.gov/AdMT
Use Form 4137 only to figure the social security and Medicare tax owed on tips you didn’t report to your employer, including any allocated tips shown on your Form(s) W-2 that you must report as income. You must also report the income on Form 1040 or 1040-SR, line 1; or Form 1040-NR, line 1a. By filing this form, your social security and Medicare tips will be credited to your social security record (used to figure your benefits). Don’t use Form 4137 as a substitute Form W-2.
You must file Form 4137 if you received cash and charge tips of $20 or more in a calendar month and didn’t 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