What this line means
The total Social Security tips already reported on all your W-2 forms (Box 7). This amount represents tip income on which your employer already withheld Social Security tax. The form uses this to determine whether your total tips — reported plus unreported — exceed the Social Security wage base, which affects how much additional tax you owe.
Does this apply to you?
- You received one or more W-2 forms with an amount in Box 7
- You worked multiple tipped jobs during the year and have W-2s from each
- You reported tips to your employer and those tips appear in your W-2
Easy to overlook
Combine Box 7 from all W-2s, not just the job where you had unreported tips If you worked two restaurant jobs and reported tips at one but not the other, you still enter the total Box 7 amount from both W-2s on line 6. This prevents double-counting of Social Security tax on tips that were already taxed through payroll withholding. 1 IRS Form 4137 instructions — Line 6
Box 7 can include tips your employer allocated to you Some large food and beverage establishments allocate tips to employees whose reported tips fall below 8% of gross receipts. These allocated amounts appear in Box 8 but are also factored into Box 7 on some W-2s. Check whether your Box 7 already includes allocated tips before adding them separately. 2 IRS Publication 531 — Reporting Tip Income
Watch out for this
Confusing W-2 Box 7 (Social Security tips) with Box 5 (Medicare wages and tips). Box 7 shows only the tip portion subject to Social Security tax, while Box 5 includes wages plus tips subject to Medicare tax. Using Box 5 on line 6 overstates your already-taxed tip amount and reduces the Social Security tax calculated on this form.
Footnotes
-
IRS Form 4137 Instructions, Line 6. https://www.irs.gov/instructions/i4137 ↩
-
IRS Publication 531, Reporting Tip Income, Allocated Tips. https://www.irs.gov/pub/irs-pdf/p531.pdf ↩