If you have not electronically filed the tax return, review the IRS form W-2 entry where the Qualified Overtime Deduction was claimed, then enter the correct amount.
Follow these steps:
- Down the left side of the screen, click on Federal.
- Down the left side of the screen, click on Wages & Income.
- Click the down arrow to the right of Wages & Salaries.
- Click to the right of Wages and Salaries (W-2).
- At the screen Let's check for other situations, select Overtime. Continue.
At the screen Let's see if your overtime qualifies as tax-free, select either:
- Help me calculate my eligible overtime.
- No help needed-I know what to enter.
For the Qualified Overtime Deduction:
- Maximum annual deduction is $12,500 ($25,000 for joint filers).
- Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
- The deduction reduces federal income tax liability, it does not exempt overtime pay from Social Security and Medicare taxes. Employees will still owe these taxes on their overtime earnings.
- Taxpayers filing as married filing separately are not eligible for the deduction.
- The deduction is available for both itemizing and non-itemizing taxpayers.
See this TurboTax Help.
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