Allocated tips are subject to social security and medicare taxes. Form 4137 should be completed to calculate the social security and medicare taxes on the allocated tips and any other tips not shown on the Form W-2.

If the taxpayer is required to report allocated tips on the return, then add the amount on Form W-2, box 8, to the amount in box 1. The total is reported on line 7 of Form 1040.

	Question: Can taxpayers who receive allocated tips from their employer ever use Form 1040EZ or 1040A to report those tips to the IRS? Answer: No. Allocated tips must be reported on Form 1040; they cannot be reported on Form 1040EZ or 1040A.