Overtime Reporting Updates (Recording)-Recording

Video Transcription

Video Summary

The webinar explains employer reporting requirements for qualified overtime compensation (QOC) under new IRC Section 225, enacted as part of the One Big Beautiful Bill Act. Employees may claim a temporary deduction for tax years 2025–2028, subject to annual limits and income phaseouts. For 2025, employer reporting was optional; beginning in 2026, employers must report QOC on Form W-2, Box 12, using code TT. Withholding generally remains unchanged unless an employee submits an updated W-4.<br /><br />QOC is tied to overtime required by the Fair Labor Standards Act (FLSA). Only the overtime premium—the 0.5 portion of time-and-a-half, calculated using the employee’s FLSA regular rate—qualifies. More generous contractual or policy-based overtime generally does not. Calculating the regular rate can be complex: most remuneration must be included, and certain payments may need to be allocated across the workweeks they cover.<br /><br />Examples address enhanced collective bargaining agreement rates, retroactive wage increases, lump-sum cost-of-living payments, and compensatory time. For eligible public employees, comp-time QOC is generally reported when the time is used or paid out, not when accrued. Employers may need to review payroll systems, separate qualifying and nonqualifying payments, and correct W-2s if errors are found. The presenters recommend seeking case-specific guidance for complex arrangements, including coaches, mixed-rate jobs, and leave-counting provisions.

Keywords

qualified overtime compensation

IRC Section 225

Form W-2 Box 12

code TT

FLSA overtime premium

regular rate calculation

employer reporting requirements

tax year 2025-2028

withholding and W-4 updates