Tax on OT

Forum|Forum|10 months ago
August 6, 2025
2 replies
1 view

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?

Ask the Experts - Beautiful - Aug 2025

xmasbaby0

Level 15

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.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Terri Lynn

Employee Tax Expert

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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Please feel free to reach out with any additional questions and . thank you so much for attending! . Please have an amazing rest of your day!Terri H.. **Say "Thanks," by clicking the thumb icon at the bottom of the post.** Mark the post that answered your question by clicking on "Mark as Best Answer.”.