The qualified overtime for the no tax on overtime deduction is in effect for tax years 2025 - 2028, not for overtime earned in prior years. It will be reported by employers . The method for reporting this is still to be determined by the IRS. As the IRS releases information, our developers will integrate the changes into TurboTax to populate the appropriate questions to easily navigate entry of the needed information.
When entering a 1099 for back wages from a lawsuit in TurboTax, you will navigate through the "Miscellaneous Income" section and specify that the payment is from a lawsuit settlement. The process varies slightly depending on whether you received a Form 1099-MISC or a Form 1099-NEC
For updates on the No Tax on Overtime deduction, please visit our One Big Beautiful Bill Tax Law Changes and How That Impacts You:
Hope this helps!
Cindy
**Please say "Thanks" by clicking the thumbs up icon in a post
***Mark the post that answers your question by clicking on the "Mark as Best Answer"
