If your W-2 lacks Box 14, you may still claim the 2025 tax-free overtime deduction in TurboTax Online. Your employer may have reported your qualified overtime on some other document such as a separat...
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If your W-2 lacks Box 14, you may still claim the 2025 tax-free overtime deduction in TurboTax Online. Your employer may have reported your qualified overtime on some other document such as a separate statement or the last paystub received in 2025.
After entering your W-2, select Overtime at the screen Let's check for other situations.
You will be prompted to manually enter your overtime premium.
Here is an example of qualified overtime. If the employee’s regular rate of pay is $20 per hour and the employee worked one hour of overtime, the employee’s overtime pay would be $30 ($20 x 1.5). The employee’s qualified overtime would be $10 ($30 overtime pay less $20 regular pay).
Then you will see the screen Were you an exempt employee? You will need to declare whether you earned the overtime pay as an employee:
exempt from the Fair Labor Standards Act or
non-exempt from the Fair Labor Standards Act.
You must select I was not an exempt employee to qualify for the deduction.
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.
The deduction is reported on line 13b of the IRS form 1040 and line 21 of the IRS Schedule 1-A.
See also this TurboTax Help.