What must Peter do since he did not report his tip income of $18,100?

Peter must file Form 4137 because this form is specifically designed for reporting tips that employees have received but may not have been reported to their employer. Tips are considered taxable income, and if they exceed a certain threshold, they should be reported to ensure compliance with tax regulations. Since Peter received $18,100 in tips, which well exceeds the reporting threshold, it is necessary for him to document this income properly using Form 4137.

This form allows taxpayers to calculate the Social Security and Medicare tax on unreported tip income. By filing it, Peter ensures that he fulfills his tax obligations and avoids potential penalties for failing to report his income accurately. Therefore, filing Form 4137 is the appropriate action for him to take in this situation.