U.S. · Payroll & tax forms
W-2 box 8, allocated tips.
Tips your employer assigned to you, why they are not in your wages, and what Form 4137 does with them.
Box 8 shows tips a large food or beverage establishment allocated to you. They are not in boxes 1, 3, 5 or 7 and no tax was withheld on them. Unless you have adequate records showing your unreported tips are less than box 8, you include them as income on Form 1040 line 1c through Form 4137, which also figures the Social Security and Medicare tax.
Estimate Form 4137 tax (tax year 2025)
Result
What box 8 is
The W-2 instructions say a large food or beverage establishment shows the tips allocated to the employee in box 8 (the allocation process is in the instructions for Form 8027). The amount is not included in box 1, 3, 5 or 7. The Form 4137 instructions add that allocated tips are shown on the W-2 but are not in box 1, and no tax is withheld from them.
What you have to do with it
You must report all your tips as income on Form 1040, 1040-SR or 1040-NR. Tips you reported to your employer are already in your box 1 wages. Enter on line 1c only the tips you received and did not report to your employer. The Form 4137 instructions say this should include any allocated tips shown in box 8, unless you have adequate records showing your unreported tips are less than the box 8 amount.
You must file Form 4137 if you received cash and charge tips of $20 or more in a calendar month and did not report all of them to your employer, and also if box 8 shows allocated tips that you must report as income.
How the Form 4137 tax is figured
Form 4137 subtracts the tips you reported to your employer from the tips you received (line 4), takes out tips under $20 in a month (line 5), and arrives at unreported tips subject to Medicare tax (line 6). For Social Security it compares the 2025 maximum of $176,100 (line 7) with your W-2 boxes 3 and 7 total (line 8); unreported tips subject to Social Security tax are the smaller of line 6 or the room left under the cap (line 10). Social Security tax is line 10 times 6.2% and Medicare tax is line 6 times 1.45%. The tool above follows those lines and leaves out line 5, which covers tips of less than $20 in a calendar month.
Worked example
Tasha works at a restaurant in 2025. Her W-2 shows box 3 of $31,000, box 7 of $6,000 and box 8 of $2,400. She has no records showing her unreported tips are lower, so she treats the $2,400 as unreported tips: $2,400 x 6.2% = $148.80 Social Security and $2,400 x 1.45% = $34.80 Medicare, a $183.60 total on Form 4137 line 13, which goes on Schedule 2. The $2,400 is also added to income on Form 1040 line 1c.
Limits of this page
The tool applies the 2025 Form 4137 rate and cap, and it ignores government-employee and railroad retirement (RRTA) rules, which the form handles separately. If you believe you are really an employee but got a 1099 instead of a W-2, do not use Form 4137; the form says to use Form 8919.
More W-2 box guides
Other pages in this set: W-2 Box 7 Social Security Tips, W-2 Box 10 Dependent Care Benefits, W-2 Box 11 Nonqualified Plans, W-2 Box 13 Checkboxes. For box 12 codes, use the W-2 box 12 lookup.
Sources
- General Instructions for Forms W-2 and W-3 (2026). Read November 2, 2026.
- Form 4137 (2025), Social Security and Medicare Tax on Unreported Tip Income, with instructions. Read November 2, 2026.
IRS pages last reviewed April 30, 2026. Wage-base and exclusion figures are stated for the tax year named where they appear.
Frequently asked questions
What is box 8 on a W-2?
Tips a large food or beverage establishment allocated to you. They are not included in boxes 1, 3, 5 or 7, and no tax was withheld from them.
Do I have to report allocated tips as income?
Generally yes. The Form 4137 instructions say your line 1c amount should include allocated tips from box 8 unless you have adequate records showing your unreported tips are less than that amount.
Do I have to file Form 4137 if box 8 has an amount?
Yes, if the allocated tips are ones you must report as income. You also file Form 4137 if you received $20 or more in tips in a month and did not report all of it to your employer.
Is box 8 the same as box 7?
No. Box 7 is tips you reported to your employer and is included in box 1. Box 8 is tips your employer allocated to you and is not in box 1.
What tax rate applies on Form 4137?
6.2% Social Security tax, up to the wage base, and 1.45% Medicare tax, on the unreported tips.
Not tax advice
This page summarizes IRS instructions, mostly written for the employers who prepare the form, and is not tax, legal or financial advice. Your payer, a CPA or an enrolled agent can confirm what a box means for your return. Everything runs in your browser; nothing you enter is sent anywhere.