Overtime Earnings

[CathyfromOhio]

My husbands employer did not include the overtime wages on his W2, in box 14.  He has 3 lines on his earnings statement.  OT@1,     OT2. OPREM     OT1, 5PREM.       Is it possible to upload his earnings statement so someone can look it over and tell me what numbers to include.  Thanks in Advance

[JamesG1]

Black out all personal information before scanning and uploading any tax information or earnings statement.

Or you may review the final paystub for the year to determine your overtime premium.  It is possible that the employer pays overtime based upon a union contract or state regulations that exceeds the FLSA requirements.   

The qualified overtime deduction amount is the “half” portion of “time-and-a-half” compensation that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

Paystubs may report either:

• the full overtime pay, or
• the "half" portion.

As an example, if the employee’s regular rate of pay is $20 per hour and the employee worked one hour of overtime, the employee’s full overtime pay would be $30 ($20 x 1.5). 

If the full overtime pay is reported, the qualified overtime for deduction purposes is equal to one-third of total overtime: $30 / 3 = $10.

The "half" portion and the employee’s qualified overtime would be $10 ($30 overtime pay less $20 regular pay).

For the deduction for qualified overtime:  

• 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.