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I forgot to add untaxed income to W-2. How do I fix this?

At my job we use the company Tippy for our tips. We are supposed to out the total of our tips on our tax return under untaxed income. I didn't do that and now I don't know what to do.
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3 Replies
DavidD66
Expert Alumni

I forgot to add untaxed income to W-2. How do I fix this?

Can you clarify your question:  Were your tips received through Tippy reported on your Form W-2?  When you say you were supposed to report your tips under "untaxed income", what do you mean by untaxed income?

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I forgot to add untaxed income to W-2. How do I fix this?

No they aren't reported on my W-2. I don't get taxed on my tips throughout the year, I am supposed to pay them when I file my taxes.

DavidD66
Expert Alumni

I forgot to add untaxed income to W-2. How do I fix this?

You will need to file an amended return and add Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of your unreported tip income as additional wages. You will owe the employee share of social security and Medicare tax owed on those tips.

 

Your employer is not handling your tips correctly.  According to the IRS:

 

"Employers are required to withhold taxes (including income taxes and the employee’s share of social security tax and Medicare tax) based upon wages and tip income received by the employee and to deposit this tax.  In addition, employers are required to pay the employer share of social security and Medicare taxes based on the total wages paid to tipped employees as well as the reported tip income. This information and tax is finally reported to the IRS on the appropriate forms by the employer.  You will owe the employee share of social security and Medicare tax owed on those tips.

 

Tips reported to the employer by the employee must be included in Box 1 (Wages, tips, other compensation), Box 5 (Medicare wages and tips), and Box 7 (Social security tips) of the employee's Form W-2, Wage and Tax Statement. Enter the amount of any uncollected social security tax and Medicare tax in Box 12 of Form W-2."

 

 

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