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Corporate Tax Software

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Corporate Tax Software

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Manufacturers' Energy Efficient Appliance Credit

Tax Relief and Job Creation Act of 2010     

Act §709 – Modification and Extension of Energy Efficient Appliance Credit for Appliances Produced After 2010

In General

The Tax Relief and Job Creation Act of 2010 modifies and extends the energy efficient appliance credit for certain dishwashers, clothes washers, and refrigerators manufactured after December 31, 2010. Under Code  §45M(a)(1), the credit may be claimed as part of the Code §38 general business credit for each type of qualified energy efficient appliance produced by the taxpayer during the 2011 calendar year ending with or within the taxpayer’s taxable year.

Credit per Unit Produced Based on Energy Efficiency

The credit may be claimed on each qualifying appliance produced by the taxpayer and is based on the type of appliance, its energy efficiency, and for dishwashers and clothes washers, the amount of water it consumes. The total credit for any type of qualifying appliance is the applicable amount listed below multiplied by the eligible production for such type. §45M(a)(2). For purposes of this code section, the term “produced” includes manufactured.  §45M(f)(7).     

Dishwashers

  • $25 in the case of a dishwasher which is manufactured in calendar year 2011 and which uses no more than 307 kilowatt hours per year and 5.0 gallons per cycle (5.5 gallons per cycle for dishwashers designed for greater than 12 place settings). §45M(b)(1)(C)
  • $50 in the case of a dishwasher which is manufactured in calendar year 2011 and which uses no more than 295 kilowatt hours per year and 4.25 gallons per cycle (4.75 gallons per cycle for dishwashers designed for greater than 12 place settings). §45M(b)(1)(D)
  • $75 in the case of a dishwasher which is manufactured in calendar year 2011 and which uses no more than 280 kilowatt hours per year and 4 gallons per cycle (4.5 gallons per cycle for dishwashers designed for greater than 12 place settings). §45M(b)(1)(E)

The term “dishwasher” means a residential dishwasher subject to the energy conservation standards established by the Department of Energy.  §45M(f)(2) 

 Clothes washers

  • $175 in the case of a top-loading clothes washer manufactured in calendar year 2011 which meets or exceeds a 2.2 modified energy factor and does not exceed a 4.5 water consumption factor. §45M(b)(2)(E)
  • $225 in the case of a clothes washer manufactured in calendar year 2011—(i) which is a top-loading clothes washer and which meets or exceeds a 2.4 modified energy factor and does not exceed a 4.2 water consumption factor, or (ii) which is a front-loading clothes washer and which meets or exceeds a 2.8 modified energy factor and does not exceed a 3.5 water consumption factor. §45M(b)(2)(F)

The term “clothes washer” means a residential model clothes washer, including a commercial residential style coin operated washer.  I.R.C. §45M(f)(3).  The term “top-loading clothes washer” means a clothes washer that has the clothes container compartment access located on the top of the machine and that operates on a vertical axis.  §45M(f)(4)

Refrigerators

The credit for refrigerators is based on their energy savings relative to the energy conservation standards promulgated by the Department of Energy that took effect on July 1, 2001.  §45M(f)(8) 

  • $150 in the case of a refrigerator manufactured in calendar year 2011 which consumes at least 30% less energy than the 2001 energy conservation standards. §45M(b)(3)(E)
  • $200 in the case of a refrigerator manufactured in calendar year 2011 which consumes at least 35% less energy than the 2001 energy conservation standards. §45M(b)(3)(F)

The term “refrigerator” means a residential model automatic defrost refrigerator-freezer that has an internal volume of at least 16.5 cubic feet.  §45M(f)(5)

Eligible Production

The production in a calendar year eligible for the credit includes only the excess of the number of appliances of such type that are produced during such calendar year in the United States over the average number of appliances of such type that were produced by the taxpayer (or any predecessor) in the United States during the preceding 2-calendar year period. §45M(c) 

Limitations

The following limitations on the credit apply to taxable years beginning after December 31, 2010:

Dollar Limitation

The aggregate amount of credit allowed with respect to a taxpayer for any taxable year shall not exceed $25 million reduced by the amount of the credit allowed to the taxpayer (or any predecessor) for all prior taxable years beginning after December 31, 2010.  §45M(e)(1). The $25 million dollar limitation shall not be taken into account for refrigerators eligible for the $200 credit and clothes washers eligible for the $225 credit.  §45M(e)(2)

4% Gross Receipts Limitation

The credit with respect to a taxpayer for the taxable year shall not exceed an amount equal to 4% of the average annual gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the credit is determined.   §45M(e)(3)

For purposes of the 4% gross receipts limitation:

  • All controlled groups of corporations, and partnerships or proprietorships that are under common control, that are treated as a single employer under §52(a) or (b) are also treated as a single producer for gross receipts limitation purposes. §45M(e)(4) & §448(c)(2)
  • If the entity was not in existence for the entire preceding 3 taxable years, the percentage of average annual gross receipts are to be applied on the basis of the period during which such entity was in existence. §45M(e)(4) & §448(c)(3)(A)
  • Gross receipts for any taxable year of less than 12 months are to be annualized by multiplying the gross receipts for the short period by 12 and dividing the result by the number of months in the short period. §45M(e)(4) & §448(c)(3)(B)
  • Gross receipts for any taxable year are to be reduced by returns and allowances made during such year.  §45M(e)(4) & §448(c)(3)(C)
  • The preceding 3 year period includes gross receipts of the taxpayer or any predecessor to the taxpayer. §45M(e)(4) & §448(c)(3)(D)

Definition of Controlled Group

Generally, controlled groups of corporations, and partnerships or proprietorships which are under common control that are treated as single employers under §52(a) or (b) are treated as single producers for purposes of the credit. §45M(g)(2)(A). Foreign corporations are not considered excluded members of a controlled group of corporations. §45M(g)(2)(B)

Verification

No amount of credit will be allowed with respect to which a taxpayer has not submitted such information or certification as the Secretary, in consultation with the Secretary of Energy, determines to be necessary.  I.R.C. §45M(g)(3) 

Carryback and Carryforward Rules

While Code §39 generally provides for a 1 year carryback and 20 year carryforward for current year business credits that exceed the limitation of Code §38(c), no portion of the unused business credit can be carried back to a tax year before the first year for which that credit is allowed. §§39(a) & (d) 

Effective Date

Act Sec. 709 applies to qualifying energy efficient appliances produced after December 31, 2010.

Page Last Reviewed or Updated: 14-Feb-2014

The Corporate Tax Software

Corporate tax software 6. Corporate tax software   Tip Income Table of Contents Introduction Useful Items - You may want to see: Keeping a Daily Tip RecordElectronic tip record. Corporate tax software Reporting Tips to Your EmployerElectronic tip statement. Corporate tax software Final report. Corporate tax software Reporting Tips on Your Tax Return Allocated Tips Introduction This chapter is for employees who receive tips. Corporate tax software All tips you receive are income and are subject to federal income tax. Corporate tax software You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Corporate tax software The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. Corporate tax software Reporting your tip income correctly is not difficult. Corporate tax software You must do three things. Corporate tax software Keep a daily tip record. Corporate tax software Report tips to your employer. Corporate tax software Report all your tips on your income tax return. Corporate tax software  This chapter will explain these three things and show you what to do on your tax return if you have not done the first two. Corporate tax software This chapter will also show you how to treat allocated tips. Corporate tax software For information on special tip programs and agreements, see Publication 531. Corporate tax software Useful Items - You may want to see: Publication 531 Reporting Tip Income 1244 Employee's Daily Record of Tips and Report to Employer Form (and Instructions) 4137 Social Security and Medicare Tax on Unreported Tip Income 4070 Employee's Report of Tips to Employer Keeping a Daily Tip Record Why keep a daily tip record. Corporate tax software   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. Corporate tax software How to keep a daily tip record. Corporate tax software   There are two ways to keep a daily tip record. Corporate tax software You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. Corporate tax software You should keep your daily tip record with your tax or other personal records. Corporate tax software You must keep your records for as long as they are important for administration of the federal tax law. Corporate tax software For information on how long to keep records, see How long to keep records in chapter 1. Corporate tax software    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. Corporate tax software To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244. Corporate tax software Also, Publication 1244 is available online at www. Corporate tax software irs. Corporate tax software gov/pub/irs-pdf/p1244. Corporate tax software pdf. Corporate tax software Publication 1244 includes a 1-year supply of Form 4070A. Corporate tax software Each day, write in the information asked for on the form. Corporate tax software   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. Corporate tax software Although you do not report these tips to your employer, you must report them on your tax return. Corporate tax software   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). Corporate tax software Then, each workday, write the date and the following information. Corporate tax software Cash tips you get directly from customers or from other employees. Corporate tax software Tips from credit and debit card charge customers that your employer pays you. Corporate tax software The value of any noncash tips you get, such as tickets, passes, or other items of value. Corporate tax software The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. Corporate tax software Electronic tip record. Corporate tax software   You can use an electronic system provided by your employer to record your daily tips. Corporate tax software If you do, you must receive and keep a paper copy of this record. Corporate tax software Service charges. Corporate tax software    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. Corporate tax software This is part of your wages, not a tip. Corporate tax software See examples below. Corporate tax software Example 1. Corporate tax software Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. Corporate tax software Jane’s bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. Corporate tax software Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. Corporate tax software Do not include the 18% charge in your tip diary. Corporate tax software Service charges that are paid to you are considered wages, not tips. Corporate tax software Example 2. Corporate tax software Good Food Restaurant also includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. Corporate tax software David’s bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of his charges for food and beverages at the bottom of the bill beneath the signature line. Corporate tax software Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. Corporate tax software Be sure to include this amount in your tip diary. Corporate tax software Reporting Tips to Your Employer Why report tips to your employer. Corporate tax software   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). Corporate tax software What tips to report. Corporate tax software   Report to your employer only cash, check, and debit and credit card tips you receive. Corporate tax software   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. Corporate tax software   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Corporate tax software Do not report to your employer any portion of the tips you receive that you pass on to other employees. Corporate tax software However, you must report tips you receive from other employees. Corporate tax software    Do not report the value of any noncash tips, such as tickets or passes, to your employer. Corporate tax software You do not pay social security, Medicare, Additional Medicare or railroad retirement taxes on these tips. Corporate tax software How to report. Corporate tax software    If your employer does not give you any other way to report tips, you can use Form 4070. Corporate tax software Fill in the information asked for on the form, sign and date the form, and give it to your employer. Corporate tax software To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. Corporate tax software   If you do not use Form 4070, give your employer a statement with the following information. Corporate tax software Your name, address, and social security number. Corporate tax software Your employer's name, address, and business name (if it is different from your employer's name). Corporate tax software The month (or the dates of any shorter period) in which you received tips. Corporate tax software The total tips required to be reported for that period. Corporate tax software You must sign and date the statement. Corporate tax software Be sure to keep a copy with your tax or other personal records. Corporate tax software   Your employer may require you to report your tips more than once a month. Corporate tax software However, the statement cannot cover a period of more than 1 calendar month. Corporate tax software Electronic tip statement. Corporate tax software   Your employer can have you furnish your tip statements electronically. Corporate tax software When to report. Corporate tax software   Give your report for each month to your employer by the 10th of the next month. Corporate tax software If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. Corporate tax software Example. Corporate tax software You must report your tips received in September 2014 by October 10, 2014. Corporate tax software Final report. Corporate tax software   If your employment ends during the month, you can report your tips when your employment ends. Corporate tax software Penalty for not reporting tips. Corporate tax software   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes or railroad retirement tax you owe on the unreported tips. Corporate tax software (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. Corporate tax software ) The penalty amount is in addition to the taxes you owe. Corporate tax software   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. Corporate tax software To do so, attach a statement to your return explaining why you did not report them. Corporate tax software Giving your employer money for taxes. Corporate tax software   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. Corporate tax software If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. Corporate tax software   If you do not give your employer enough money, your employer will apply your regular pay and any money you give in the following order. Corporate tax software All taxes on your regular pay. Corporate tax software Social security, Medicare, and Additional Medicare taxes or railroad retirement taxes on your reported tips. Corporate tax software Federal, state, and local income taxes on your reported tips. Corporate tax software    Any taxes that remain unpaid can be collected by your employer from your next paycheck. Corporate tax software If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. Corporate tax software See Publication 505, Tax Withholding and Estimated Tax, for more information. Corporate tax software    Uncollected taxes. Corporate tax software You must report on your tax return any social security and Medicare taxes or railroad retirement tax that remained uncollected at the end of 2013. Corporate tax software These uncollected taxes will be shown on your 2013 Form W-2. Corporate tax software See Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. Corporate tax software Reporting Tips on Your Tax Return How to report tips. Corporate tax software    Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1. Corporate tax software What tips to report. Corporate tax software   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Corporate tax software Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Corporate tax software Add to the amount in box 1 only the tips you did not report to your employer. Corporate tax software    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. Corporate tax software    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. Corporate tax software   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. Corporate tax software Cash and charge tips you received that totaled less than $20 for any month. Corporate tax software The value of noncash tips, such as tickets, passes, or other items of value. Corporate tax software Example. Corporate tax software Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. Corporate tax software Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. Corporate tax software He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. Corporate tax software Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages plus $7,000 reported tips) in box 1. Corporate tax software He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. Corporate tax software Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. Corporate tax software    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. Corporate tax software To report these taxes, you must file a return even if you would not otherwise have to file. Corporate tax software You must use Form 1040. Corporate tax software (You cannot file Form 1040EZ or Form 1040A. Corporate tax software )    Use Form 4137 to figure social security and Medicare taxes. Corporate tax software Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. Corporate tax software Use Form 8959 to figure Additional Medicare Tax. Corporate tax software    If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. Corporate tax software To get railroad retirement credit, you must report tips to your employer. Corporate tax software Reporting uncollected social security, Medicare, or railroad retirement taxes on tips reported to your employer. Corporate tax software   You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. Corporate tax software For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. Corporate tax software   If your employer could not collect all the social security and Medicare taxes or railroad retirement tax you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). Corporate tax software You must report these amounts as additional tax on your return. Corporate tax software Unlike the uncollected portion of the regular (1. Corporate tax software 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported in box 12 of Form W-2 with code B. Corporate tax software    To report these uncollected taxes, you must file a return even if you would not otherwise have to file. Corporate tax software You must report these taxes on Form 1040, line 60. Corporate tax software See the instructions for Form 1040, line 60. Corporate tax software (You cannot file Form 1040EZ or Form 1040A. Corporate tax software ) Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. Corporate tax software They are not included in box 1 with your wages and reported tips. Corporate tax software If box 8 is blank, this discussion does not apply to you. Corporate tax software What are allocated tips. Corporate tax software   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. Corporate tax software Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. Corporate tax software No income, social security, Medicare, Additional Medicare or railroad retirement taxes are withheld on allocated tips. Corporate tax software How were your allocated tips figured. Corporate tax software   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). Corporate tax software Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. Corporate tax software For information about the exact allocation method used, ask your employer. Corporate tax software Must you report your allocated tips on your tax return. Corporate tax software   You must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. Corporate tax software Any tips you reported to your employer for 2013 are included in the wages shown in box 1 of your Form W-2. Corporate tax software Add to the amount in box 1 only the tips you did not report to your employer. Corporate tax software This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated figures. Corporate tax software   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. Corporate tax software How to report allocated tips. Corporate tax software   Report the amount in box 1 and the allocated tips in box 8 of your Form(s) W-2 as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. Corporate tax software (You cannot file Form 1040A or Form 1040EZ when you have allocated tips. Corporate tax software )    Because social security, Medicare, and Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. Corporate tax software Complete Form 4137, and include the allocated tips on line 1 of the form. Corporate tax software See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. Corporate tax software Prev  Up  Next   Home   More Online Publications