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Reporting Qualified Overtime 2025 W-2

Eric Updated by Eric

In tax years 2026 and later, Qualified Overtime—a deduction created by the "One Big Beautiful Bill Act" and signed into law in July 4, 2025—should be reported on Box 12 using the code "TT".

For the transition year 2025, however, Qualified Overtime is treated differently. Employers must furnish to employees a statement with the amount of Qualified Overtime.

CFS Payroll System 2025 can report this amount on Box 14 of the 2025 W-2 using the new Income Item called Qualified OT (Info only) for this purpose.

This new income item will not change the calculation of paychecks, but entries into it will flow to W-2 Box 14.

Adding the Qualified Overtime income item to the Employer

  1. Double-click on the desired client.
  2. Click the Payroll Setup tab.
  3. Click Add under Income Items.
  4. In the Full name pulldown select Qualified Overtime (Info only).
    Do not mark any tax or deduction boxes. This Income Item is informational only.
    By default the Box 14 Description is set to "TT", which is code for Qualified Overtime that will be used for 2026 and beyond for Box 12.
  5. Click OK then Save.

Entering Qualified Overtime amounts for employees

  1. Open the Payroll Grid.
  2. Select the desired Employee.
  3. Input the amount of Qualified Overtime.
    Only the premium portion of the overtime pay (the "half" in "time-and-half") should be input.
    Some states, like California, have more generous overtime laws but only overtime that meets the federal standard is Qualified. Only input overtime premium amounts that match the federal definition of overtime.
    As this is an informational income item only, users may input an amount for each paycheck or the total amount for the year in one row of the Payroll Grid.
  4. After generating the W-2, the amount(s) will flow to Box 14 on the 2025 W-2. Double-check the amount and make any desired modifications.

How did we do?

PA Form REV-1667 - CSV File Upload Instructions

South Carolina Form WH-1612 – Transmittal Form for W-2s or 1099s Submitted by Paper

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