W2 Box 12a - Uncollected Medicare Tax on Tips (Code B) - What does this mean for my tax return?

That Code B in Box 12a is basically telling you that your employer didn't collect enough Medicare tax on some of your reported tips. This happens when you receive cash tips that you reported to your employer, but they weren't able to withhold the proper Medicare tax from your regular wages. When you file your tax return, you'll need to pay this additional Medicare tax. It's calculated as 1.45% of those tips that weren't properly taxed before. You'll report this on your Form 1040 through Schedule 2, Additional Taxes. The tax software you're using should handle this correctly when you enter your W-2 information. Don't worry too much - it's fairly common in the restaurant industry, especially if you had a good night of tips but a smaller regular paycheck that week, so there wasn't enough money to withhold all the required taxes.

I actually ran into this exact same issue last year with my side gig at a bar. I was totally confused by this Box 12 Code B thing. I ended up using https://taxr.ai to figure it out - uploaded my W2 and they explained everything. Turns out it was super simple to handle. The system showed me exactly where to report it in my tax software and calculated the amount I needed to pay. Really helpful because the regular tax sites were giving me generic answers that didn't apply to my specific situation.

Just wanted to follow up about my experience with taxr.ai that someone mentioned earlier. After asking about it, I decided to give it a try since I was still confused about my Box 12 Code B situation. Wow, it was actually super helpful! I uploaded my W2 and within minutes got a detailed breakdown of what the code meant for MY specific tax situation. They explained that since I only made about $2,000 in tips for the year, my uncollected Medicare tax was roughly $29 (1.45% of my unreported tips). The tool showed me exactly which line to put this on in TurboTax with screenshots. Saved me so much time and confusion. Definitely recommend if you're dealing with tax forms with weird codes!

If you're still struggling with this or have other tax questions, you might want to try https://claimyr.com to actually get through to an IRS agent. I've used it twice now when I had complicated tax situations. They have this system that holds your place in the IRS phone queue and calls you back when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c For something like this Code B issue, an IRS agent can give you the official answer and they can look at your specific account. Better than trying to piece together advice from different websites. I spent weeks trying to call the IRS directly before discovering this service.

I need to apologize for being so skeptical about Claimyr. After posting my doubts, I decided to try it anyway because I was still confused about my tax situation with the uncollected Medicare tax. I'm honestly shocked - it actually worked! I got a call back in about 2 hours and spoke with an IRS agent who explained exactly how to handle the Code B on my W2. She confirmed everything that people said here about it being the Medicare tax on reported tips that weren't properly withheld. The agent walked me through exactly how to report it on my tax return. For anyone curious, it goes on Schedule 2, and it's literally just 1.45% of whatever amount is shown with the Code B. For me it was only like $30.

Just wanted to add - I'm a server and we get these Code B amounts on our W2s all the time. It's super common in the restaurant industry and not something to stress about. One tip tho - make sure you're keeping good records of your cash tips throughout the year. A lot of servers I know use tip tracking apps. This helps when you're reporting tips to your employer and makes tax time way easier. If you under-report your tips during the year but then accurately report them at tax time, you'll end up with even more uncollected taxes to pay.

Don't stress too much about this. The amount you'll owe is small based on what you described. Since you only made around $2k at the restaurant job, the most your uncollected Medicare tax could be is about $29 (1.45% of $2,000). When you enter your W2 information into TurboTax, it should automatically handle this. Just make sure you enter everything from all boxes on your W2 correctly.

Just to add another perspective - I work part-time at a pizza place and see this Code B on my W2 every year. One thing that helped me understand it better is thinking of it this way: when you report your cash tips to your employer during the year, they're supposed to withhold Medicare tax on those tips from your regular paycheck. But sometimes your regular wages aren't high enough to cover all the withholding needed. For example, if you worked a 4-hour shift and earned $40 in wages but reported $200 in tips, your employer can't withhold Medicare tax on all $200 of those tips from just your $40 paycheck. The "uncollected" amount shows up as Code B and you pay it when you file your return. The good news is that most tax software handles this automatically when you enter your W2 info. You shouldn't need to do any manual calculations - just make sure you enter all the information from your W2 accurately and the software will take care of the rest!