Tax on OT

Agwoods11 — Wed, 06 Aug 2025 23:31:53 GMT

What is the difference of filling jointly or single with the following scenario;

One works 80 plus hours a week

On payroll - makes 160k/year

The other owns a business and makes 75k/year

Which is the best way to file; married or single for the tax on OT benefits?

Re: Tax on OT

xmasbaby0 — Wed, 06 Aug 2025 23:34:12 GMT

If you are legally married, then filing "single" is not an option. Your filing choices are to file a joint return or to file married filing separately.

Re: Tax on OT

Terri Lynn — Thu, 07 Aug 2025 00:11:48 GMT

Under the One Big Beautiful Bill, the married filing jointly would still be the best option for your scenario, based on the information provided, to maximize the overtime deduction benefits.

How the Overtime Deduction Works:

Married Filing Jointly: You can deduct up to $25,000 of qualified overtime pay. The deduction begins to phase out when your combined modified adjusted gross income (MAGI) exceeds $300,000.
Single: As a single filer, you could only deduct up to $12,500 of qualified overtime pay, and the deduction would begin to phase out at a MAGI of $150,000.

In your specific situation, your combined income would be $235,000 ($160k + $75k). Filing jointly keeps you well below the $300,000 MAGI phase-out threshold, allowing you to claim the full $25,000 deduction. If you were to file as single, the higher-earning spouse's income of $160,000 would put them immediately into the phase-out range for the deduction, significantly reducing or eliminating their benefit.

Also worth noting:

MAGI Phase-Out: The deduction is reduced by $100 for every $1,000 your MAGI exceeds the threshold.
Qualified Overtime: The deduction applies specifically to the premium portion of overtime pay (the "half" in "time-and-a-half").
Filing Status Requirement: To claim the full overtime deduction, married couples must file a joint return, hence the deduction is not allowed for the married filing separate status.

For more detailed information see:

Please feel free to reach out with any additional questions

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Tax on OT

Re: Tax on OT

Re: Tax on OT

How the Overtime Deduction Works:

Also worth noting: