IRS Letter 2014-7

Forum|Forum|8 months ago
January 27, 2026
2 replies
75 views

I have a W-2 with exempted income under Rule 2014-7. The income shows qualified overtime. The program is deducting the exempted income overtime as a deduction against regular income. This can't be right.

Is there a fix in the wind or is this exempted income actually deductible?

TurboTax Home & Biz Windows

Best answer by KrisD15

No,

since the income is exempt from Federal Income tax, you would not deduct the overtime.

The "fix" is that after you enter your W-2 and select "Medicare/ Difficulty of Care Payments" continue to the screen that asks "Were you an exempt employee?" and select "I was an exempt employee".

The program will not calculate a deduction for your overtime since your income is already exempt from Federal Income Tax. (You are an exempt employee)

Although the income is exempt from Federal Income Tax, you still enter the W-2 as the income may increase your earned Income Credit if you are eligible.

KrisD15Answer

Level 15

No,

since the income is exempt from Federal Income tax, you would not deduct the overtime.

The "fix" is that after you enter your W-2 and select "Medicare/ Difficulty of Care Payments" continue to the screen that asks "Were you an exempt employee?" and select "I was an exempt employee".

The program will not calculate a deduction for your overtime since your income is already exempt from Federal Income Tax. (You are an exempt employee)

Although the income is exempt from Federal Income Tax, you still enter the W-2 as the income may increase your earned Income Credit if you are eligible.

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