Overtime Deduction

[parvitstax]

I understand the overtime deduction is new for 2025. 

This is a scenario where payroll did not enter OT pay on box 14. 

I am seeing information about divide by 3 on all 1.5 overtime pay and enter on line 14c. 

I am also seeing other information saying "Overtime - F" (FLSA amount) on a paystub is the deductible amount. 

Can you please help me understand what is the true deductible OT portion? 

[strongsilence]

Only the "premium" portion is deductible.

The AICPA has very good examples.

[parvitstax]

On the client's paystub they have 3 types of overtime:

1. Overtime Pay (which seems to be the 1.5 pay)

2. Double Pay

3. Overtime - F

I have had other clients with Box 14 with OT already calculated which has been very small $ amounts similar to "Overtime - F" on the client mentioned above. Using #1 and #2 above yields very different results (much more refund). 

Can you explain which of these #s above to use to determine the OT deduction? #3 is the entry confusing me since the IRS site states FLSA is deductible and that's what "Overtime - F" represents. 

[strongsilence · Accepted solution]

per AICPA TAX rewind webinar

Qualified overtime — The basics
Definition (Notice 2025-69)

• Qualified overtime compensation is overtime compensation required and paid under 29 USC Sec. 207 that is in excess of the employee’s regular rate (i.e., the premium portion). Only FLSA-eligible employees (covered + not exempt) qualify.
• Up to $12,500 per return ($25,000 joint).
• Begins at MAGI $150k / $300k (same as tips).
• If someone says “I made $15,000 in overtime,” your next question is: “Was that the total overtime line… or the premium portion?” Only the premium portion is the starting point.

The “Premium-Only” concept (time-and-a-half)
If overtime is paid at 1.5× the regular rate:

• Why “divide by 3” shows up in the IRS examples
• If the pay stub lumps “overtime” as the total 1.5× amount (regular + premium), then the premium portion is one-third of that total. That’s why the IRS example uses “divide by 3.”
• Qualified OT (premium) = Total OT line × (1/3) [for 1.5× overtime]

[parvitstax]

I am now seeing that "Overtime-F" on a paystub represents overtime HOURS worked. So my #3 above does not apply in the $ totals to report for the deduction. 

[ljr]

I would use the time and a half number only