No tax on overtime question

[The_Jim]

@sigpros An accountant can handle it no problem. Just don't go to HR Block, choose a real accounting firm.

I'm sure turbotax has a tool to handle it too. My wife is a CPA, when she quit working to stay home with kids she reluctantly used TurboTax to e-file our return. She's been impressed with how well it works.

 

[westbranch]

Ok so a little more into this first off my employer doesnt have the totals on the last pay stub of the year. We also don't have a payroll dept here as it is outsourced. What the hang up is the way we get paid overtime isnt normal like other places and here is the best example I can come up with

Lets say my pay rate is $20 an hour. And I work a 12 hour shift

Normal way OT is paid is employee would get paid:

8 hours at $20
4 hours at $30

so when you put the OT it gets divided by 1/3 makes since

How we get paid is we would get

12 hours at $20
6 hours at $20

So when I would use my "OT" it is already at the third rate. So I should be at the max of $25K but it is taking my "third" amount and dividing it by 3 again. I have someone coming over to discuss it today because they redid our pay check form this year but we are still getting paid like this so we will still have the same issue next year. Any thoughts on a solution?

The OT tax deduction was written by congress to be for OT paid under federal labor standards act - FLSA - which is when OT paid for working >40 hrs in a week. OT paid for >8hrs in a day doesn't count.

And the requirement to report it on W2s for 2025 went away. So the IRS has no way to know if the number is correct that people are reporting.

 

[SAJ-99]

This was the first thing that pops into my head when stuff like this comes up.

 

[antelopedundee]

@sigpros An accountant can handle it no problem. Just don't go to HR Block, choose a real accounting firm.

I'm sure turbotax has a tool to handle it too. My wife is a CPA, when she quit working to stay home with kids she reluctantly used TurboTax to e-file our return. She's been impressed with how well it works.

TurboTax is free if you are a member of CreditKarma.com which is also free. They say ANY return. I got suckered in with TT and ended up paying because mine wasn't simple enough. FU*K them, never used them again. AFAIK all of the free services update their software to handle any changes.

 

[The_Jim]

TurboTax is free if you are a member of CreditKarma.com which is also free. They say ANY return. I got suckered in with TT and ended up paying ecause mine wasn't simple enough. FU*K them, never used them again. AFAIK all of the free services update their software to handle any changes.

If its not a basic W2 return you really should go to a CPA. My wife has to get creative with the software to do ours correctly as there are some extras on it. If she wasn't an accountant in her former life it wouldn't work for us.

 

[antelopedundee]

If its not a basic W2 return you really should go to a CPA. My wife has to get creative with the software to do ours correctly as there are some extras on it. If she wasn't an accountant in her former life it wouldn't work for us.

Before he retired my CPA used the professional version of TT. Unless you are doing a business return, I see no reason to use a CPA.

The main thing I don't like is that they make doing K-1 income more complicated than necessary. For me it's hard to just skip through some of that stuff.

 

[Nick87]

- which is when OT paid for working >40 hrs in a week. OT paid for >8hrs in a day doesn't count.

If you work 5-8 hour days does it really matter? None of my checks distinguish which day I received overtime. Just straight time hours which are never more than 40 and OT hours.

I dont really understand everyone bagging on the No tax on OT. I guess some people thought they were gonna get rich. (Which is kinda hilarious) But I'll gladly take the 2 to 5 thousand a year more than I had previous years.

 

[Nick87]

Also as of the first of the year my employer stared breaking it down on our stub. Hopefully you guys as well. Not that it was all that hard to break it down before.

 

[mtmiller]

I dont really understand everyone bagging on the No tax on OT. I guess some people thought they were gonna get rich. (Which is kinda hilarious) But I'll gladly take the 2 to 5 thousand a year more than I had previous years.

Are you expecting $5k back with No OT Tax? Incredible numbers, well done.

 

[Nick87]

Are you expecting $5k back with No OT Tax? Incredible numbers, well done.

Not for 2025 probably closer to 2800. Started with a new company last septemeber year with a LOT more OT. Thats just rough figuring. And I might be way off so anyone who has a better grasp please let me know. I just figured $40 to $60k in total overtime. So roughly 1/3 is the eligible OT so if I average it at say 45k which comes out to $15 to $18k at my tax brackets (22% filing jointly) comes out between 3 and 4k. I just used between 2 and 5k because every year is different how much actual OT we get. 30k in OT definitely a minimum unless we have a seriously bad year. $5k would be tops.

 

[MTGomer]

Just fill it out to maximize your refund. Claim ignorance if you get questioned on it. Merica!

Everything is a write off until you get audited and everything that isn’t allowable is a naive misunderstanding, and not criminal intent.

(Not legal advice).

 

[Nick87]

Are you expecting $5k back with No OT Tax? Incredible numbers, well done.

Also imagine how much further that 2 to 5k would go if I was living where you do. (I'm making assumptions about your cost of living).

 

[brymoore]

One, Big, Beautiful Bill: How to take advantage of no tax on tips and overtime | Internal Revenue Service

Tax Tip 2026-06, Jan. 26, 2026 — The One, Big, Beautiful Bill has a significant effect on federal taxes, credits and deductions. Millions of taxpayers reported earning tips and overtime on their tax returns, many of them are veterans and people working in lower wage jobs. This relief will impact...

www.irs.gov

If I’m reading this correctly, OT maximum amount that qualifies is $25k for married couples. Anything above gets taxed.

 

[cgasner1]

One, Big, Beautiful Bill: How to take advantage of no tax on tips and overtime | Internal Revenue Service

Tax Tip 2026-06, Jan. 26, 2026 — The One, Big, Beautiful Bill has a significant effect on federal taxes, credits and deductions. Millions of taxpayers reported earning tips and overtime on their tax returns, many of them are veterans and people working in lower wage jobs. This relief will impact...

www.irs.gov

If I’m reading this correctly, OT maximum amount that qualifies is $25k for married couples. Anything above gets taxed.

Last year I wrote a check for 7k to the feds. Haven’t filed yet but Chatbot says I should get between 8-10k back. My guy on the crew just filled his and go 10.6k back this year thanks to that ot bill

 

[Nick87]

One, Big, Beautiful Bill: How to take advantage of no tax on tips and overtime | Internal Revenue Service

Tax Tip 2026-06, Jan. 26, 2026 — The One, Big, Beautiful Bill has a significant effect on federal taxes, credits and deductions. Millions of taxpayers reported earning tips and overtime on their tax returns, many of them are veterans and people working in lower wage jobs. This relief will impact...

www.irs.gov

If I’m reading this correctly, OT maximum amount that qualifies is $25k for married couples. Anything above gets taxed.

Thats how I read it as well. So 75k in total overtime. Only the actual .5 of the 1.5 applies if I understand it correctly.

Also all of my wife's income is tips. Not a lot as its only weekends but still that will bonus another 800 to 1200 to us depending on the year.

 

[brymoore]

Thats how I read it as well. So 75k in total overtime. Only the actual .5 of the 1.5 applies if I understand it correctly.

Also all of my wife's income is tips. Not a lot as its only weekends but still that will bonus another 800 to 1200 to us depending on the year.

I thought $25k in revenue not taxes but I may be wrong.

Lots of complaining about BBB but my wife and I are getting crazy tax reductions.

 

[Nick87]

I thought $25k in revenue not taxes but I may be wrong.

It is i think. What I'm trying to say is if my hourly rate is say 50 an hour Id be at 75 on OT. Of that 75 only 25 goes towards the tax credit so 75k total overtime on the check per couple filing jointly. If that makes sense.

50 of the 75 is still straight time so the way the bill reads is that the 25 is the actual ot.

 

[DFS]

It is i think. What I'm trying to say is if my hourly rate is say 50 an hour Id be at 75 on OT. Of that 75 only 25 goes towards the tax credit so 75k total overtime on the check per couple filing jointly. If that makes sense.

50 of the 75 is still straight time so the way the bill reads is that the 25 is the actual ot.

I consulted my accountant and I believe you are correct, it also phases out if you make over a certain amount. Usually a program the democrats would have came up with and supported.

On a different note I called in a double tonight and got a big female coyote. 77 tmk’s have stoned them so far. The male bugged out so fast I never got a shot.

 

[Nick87]

On a different note I called in a double tonight and got a big female coyote. 77 tmk’s have stoned them so far. The male bugged out so fast I never got a shot.

Wish we had more snow. Had big plans of doing more calling with the kids this year. Calling coyotes without the snow just isn't the same for me.

 

[DFS]

Wish we had more snow. Had big plans of doing more calling with the kids this year. Calling coyotes without the snow just isn't the same for me.

Overcast and no snow I felt like I was blind. Had one hackled up and leaving early but I think he just went and collected the female before they came in.