If you are a non-exempt employee, your employer has to pay you overtime at time and a half according to the Federal Labor Standards Act when you work over 40 hours a week. If you are not on salary, you are likely a non-exempt employee. If you are then the "half" in the time and a half is what is deductible for the No Tax on Overtime Deduction.
To qualify the following must apply:
- You must be a non-exempt employee eligible for Overtime under the federal Fair Labor Standards Act
- The Overtime must be on hours worked OVER 40 hours. (if you live in a state where OT pay is required after 8 hours, this does not apply)
- Overtime must be paid at more than your regular hourly rate.
- Only the amount that is over your regular hourly rate is deductible. For example, If you make $30 per hour and are paid OT at $45 an hour, you can only deduct $15 per hour as overtime deduction.
- Your filing status cannot be Married Filing Separately
- Your income must be less than $150,000 if you are single or $300,000 if Married Filing Jointly.
To do so in TurboTax take the following steps:
- Enter your W-2
- Enter your Overtime in box 14 and select Overtime in the dropdown
- Continue through to the overtime questions
- You will be given the opportunity to have TurboTax help you calculate your Overtime or You can select you already know the amount.
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