What this line means
The combined total of your unreported tips (from Part I) and the Social Security tips already reported on your W-2s. This represents your full tip income that is potentially subject to Social Security tax. The actual taxable amount depends on whether your total wages and tips have already reached the Social Security wage base for the year.
Does this apply to you?
- You had any unreported tips during the year and are completing Form 4137
- You worked tipped jobs and need to determine your full Social Security tip exposure
- You earned tips at multiple employers and need to combine all tip amounts
Easy to overlook
High-income tipped workers hit the Social Security wage base The Social Security wage base for 2025 is $176,100. If your total wages plus all tips (reported and unreported) exceed this amount, you do not owe Social Security tax on the excess. This matters for workers who have high base wages in addition to tips, or who earn substantial tips across multiple jobs. 1 IRS Form 4137 instructions — Line 7
Medicare tax has no wage base cap Unlike Social Security tax, Medicare tax applies to all tip income regardless of how much you earned. Even if line 7 exceeds the Social Security wage base and you owe no additional Social Security tax on some tips, you still owe Medicare tax on every dollar of unreported tips. 2 IRS Publication 15 — Employer’s Tax Guide
Watch out for this
Forgetting to include tips from all employers. If you worked at three restaurants and had unreported tips at only one, line 7 still includes the reported tips from all three jobs (via line 6) plus the unreported amount. Using only one employer’s W-2 data understates line 7 and produces an incorrect wage base comparison on line 10.
Footnotes
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IRS Form 4137 Instructions, Social Security Wage Base. https://www.irs.gov/instructions/i4137 ↩
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IRS Publication 15 (Circular E), Employer’s Tax Guide, Social Security and Medicare Tax Rates. https://www.irs.gov/pub/irs-pdf/p15.pdf ↩