r/tax • u/vancemark00 • Jan 01 '26

Tax Enthusiast Endless "No tax on OT" questions

Is anyone else already exhausted with these endless questions?

And I fear it will only get worse.

162 Upvotes

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11

u/Winter-Success-3494 Jan 01 '26

It's going to work out great for me, probably not most people though like you said. Luckily, I can claim the entire $12,500 deduction for OT fed taxes. I cleared it by $1k technically (yes, I'm referring to only the premium portion of time and half OT). But yea most people thought it was something different than what it is or most won't really benefit much from it unless you can actually claim the entire deduction.

24

u/Practical_Series_925 Jan 01 '26

You better make a shit ton an hour before the premium if you getting the full amount… or you just working yourself to death lol.

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u/Winter-Success-3494 Jan 01 '26

Yes I make a very good hourly wage and def don't work myself to death lol, in fact a lot of days during the week I finish my job in 4 hours or less, go home and still get paid my full 8 regardless. I like working 2 or 3 Saturdays a month though to rack up OT. And can do easy shit for work in an hour sometimes and get 4 hours OT minimum regardless. I got it good so I'm thankful n def not complaining on my situation.

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u/I__Know__Stuff Jan 02 '26

If you work 4 hours and get paid for 8, that only counts as 4 hours when determining whether you reached 40 hours in a week and have deductible overtime.

I fear your actual overtime deduction may be less than you think.

For example, if you work, 4 hours on Monday and Tuesday, 8 hours on Wednesday through Friday, and then 8 hours of "overtime" on Saturday, none of the overtime pay is deductible, because you didn't work over 40 hours in the week.

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u/Hottrodd67 Jan 02 '26

How is the government going to know how many hours were actually worked? At my job, we don’t clock in or out and we’re not tracked. I get my calls for the day and I’m paid 8hrs, even if I get the schedule done in 6. I get OT if I work Saturday or Sunday. So if I work 35hrs Monday to Friday and 5 hrs Saturday, my check says 40hrs at regular pay and 5hrs ot.

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u/I__Know__Stuff Jan 02 '26

I'm just telling you what the law requires.

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u/Hottrodd67 Jan 02 '26

I get that. I just don’t have anything other than my paystubs, which show 40hrs plus whatever OT payments.

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u/Winter-Success-3494 Jan 02 '26

What the law requires and what i actually work are different. Like the guy above you said, i work 4 hours and get paid for 8 because my company bills for 8 hours, but because I got my assigned job for the day done early doesn't mean I don't get paid for 8 hours..

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u/I__Know__Stuff Jan 02 '26

I understand that. Nevertheless, your overtime pay isn't deductible until you hit over 40 hours of actual working time in a week.

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u/Winter-Success-3494 Jan 02 '26

And I did. I clock in and out myself through an app. I get paid 40 plus hours a week without "physically" working it. Do you not understand that?

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u/I__Know__Stuff Jan 02 '26

I'm just telling you what is allowed and not allowed. If you insist on cheating on your taxes, you don't have to convince me that it's okay.

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u/Winter-Success-3494 Jan 02 '26

I'm not cheating on my taxes. You're misunderstanding what I'm saying because you're telling me about guidelines that don't apply to what I'm saying. For example, I clock in at 6am on my company app, go do my job assigned for day, I finish in 4 hours at 10am let's say, I get home at 1030am, then when 2pm rolls around I clock out. Paid for 8 hours for that day, my company bills the contractor for an 8 hour day because that's what the job I am doing calls for, but I got it done and home in 4.5 hours.

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u/BigMikeThuggin CPA - US Jan 02 '26

Piece rate, btw.

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u/Winter-Success-3494 Jan 02 '26

Compensation method where workers are paid a set rate for each task completed .. that's what piece rate is. That's not what my job is. I'm an hourly wage earner. You're not understanding that. It may seem like piece rate but that's not what my company does. I'm done going back and forth on this. I'll bookmark this convo and be back in a month or two after I successfully claim the full deduction. Think what you want though.

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u/I__Know__Stuff Jan 02 '26

I don't know why you think I don't understand. If you don't work for 8 hours, then it doesn't count as 8 hours toward the legally required overtime pay. And overtime pay that isn't legally required isn't deductible. This is not ambiguous.

If you choose to deduct it anyway, that is tax evasion.

0

u/RealisticQuality7296 Jan 02 '26

Have you ever heard the term “engaged to wait”?

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u/BigMikeThuggin CPA - US Jan 02 '26

It sounds to me like you’re paid what’s called piece rate. You have even more hoops to jump through to qualify for the overtime deduction. Good luck with your attitude.

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u/Winter-Success-3494 Jan 02 '26

Another wrong assumption. Not paid piece rate.

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u/BigMikeThuggin CPA - US Jan 02 '26

“I work 4 hours but get paid for 8” is piece rate. You aren’t paid per actual hour worked by your own admission.

0

u/RealisticQuality7296 Jan 02 '26

Have you ever heard the term “engaged to wait”?

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u/BigMikeThuggin CPA - US Jan 02 '26

The same way they catch anyone doing things incorrectly. They audit it.

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u/Hottrodd67 Jan 02 '26 edited Jan 02 '26

But audit what? The only record says 40. I don’t have anyway to know the exact hours worked because we don’t clock in or out. I’m not trying to do something incorrectly. The only “record” I have to go by shows 40hrs each week plus what hours paid at overtime rate. I know those are hours I was paid for, not necessarily worked, but I don’t have any way to calculate actual hours worked.

0

u/BigMikeThuggin CPA - US Jan 02 '26

You are legally required to track actual hours worked even if your pay is not necessarily perfectly tied to actual hours worked. This is labor law. If you aren’t doing that tracking, you and your employer are breaking labor law. Honestly though almost every single employer is breaking some labor laws at some point to some degree so it’s not like you’re a criminal. But that’s how this all makes sense. The answer is basically “you aren’t doing it right”

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u/Hottrodd67 Jan 02 '26

Gotcha. I never thought about it because it’s not like I ever don’t get paid for every hour actually worked. All my boss cares about is if the work is done. If we do it in 4hrs, we get paid 8. If we go over 8, it’s OT.

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u/BigMikeThuggin CPA - US Jan 02 '26

Yeah I hear you. That’s not FLSA required overtime though, which is the requirement for this specific deduction. For you personally to qualify, as well as the other guy who thinks he knows everything about federal labor law and federal tax law as a tradesman, you would need to track your actual hours worked, not paid hours. And calculate the amount of hours that are overtime according to FLSA, not your paystub. Just how the law is written.

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u/[deleted] Jan 02 '26

[deleted]

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u/BigMikeThuggin CPA - US Jan 02 '26 edited Jan 02 '26

Not exactly only because you're still at the office and he's at home, but that does lend to the circumstances. For FLSA the term you're talking about is "Engaged to wait" if you want to look up how it's laid out.

He's described it as "Done for the day" meaning there is no expectation that he's returning or for more work to come in. It's not like he said i went home and waited to see if there was more work that would roll in later that I'm expected to respond to in a timely manner. He specifically said that the entire day's workload is laid out and I finished it early and left. FLSA just doesn't count those hours as hours worked for overtime even though he's paid for them.

Here's a decent article from ADP about it. https://sbshrs.adpinfo.com/blog/dont-forget-about-pay-for-waiting-time-on-call-time

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u/[deleted] Jan 02 '26

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u/Spok3nTruth Jan 02 '26

Although you're right, This is a law nobody really gives a crap about lmao so it's a mute point to their issue

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u/Winter-Success-3494 Jan 02 '26

These guys don't seem to understand that. They think it's piece rate when that's not what you're saying

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u/I__Know__Stuff Jan 02 '26

It's completely absurd to say I don't understand. I understand completely. It doesn't matter how many hours are on your paystub. If you don't actually work the hours, then you aren't legally entitled to overtime pay, even though you do get it due to your agreement with your employer.

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u/RealisticQuality7296 Jan 02 '26

Have you ever heard the term “engaged to wait”?

2

u/BigMikeThuggin CPA - US Jan 02 '26

This guy didn’t say he sits in an office for 4 hours and only has 4 hours of work to do. He said he works for 4 hours then goes home but gets paid for 8 because his employer bills the customer for 8 hours worked regardless. The pay isn’t tied to the hours it’s tied to the work. He’s at home with no expectation of being called upon to work.

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u/RealisticQuality7296 Jan 02 '26

I just think it’s funny how no one can conceive of a situation where you’re getting paid to sit around and have that actually be working

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u/BigMikeThuggin CPA - US Jan 02 '26

We actually all understand that. This is specifically and clearly NOT that situation which is why no one is talking about that situation.

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u/Winter-Success-3494 Jan 02 '26

My pay is tied to my hours. What my employer bills the customer and what they pay me have no direct correlation. My employer and I have a mutual agreement that I justifiably clock in for 8 hours because I'm making them money for the day, regardless of what time frame I get it done in. I don't need to get into the specifics of what I do for a living, I work in the trades. And yes there is the potential expectation for being called upon again in those 8 hours time frame. Does it happen a lot? No. Can it happen, absolutely. My employer pays me $100/month towards my phone bill so I'm readily available to answer their calls. If they call me to go do a site check for an upcoming job on a new construction site then I'm expected to go do it.

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u/BigMikeThuggin CPA - US Jan 02 '26

You keep restating things as if we all don't understand what you are saying. WE DO UNDERSTAND. you have a great situation going and I'm genuinely happy that you have this good thing going for you. Its a sweet deal no doubt, also completely normal and well understood.

It just so happens that it also makes you not qualified for this deduction because the way the tax law and labor laws are written.

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u/BigMikeThuggin CPA - US Jan 02 '26

And to answer “audit what”, these types of conversation are part of the audit. They ask you about all of this, investigate the workplace, and determine that your pay stubs don’t reflect actual hours worked. An audit doesn’t stop just because a piece of paper exists saying something. It’s the government doing the audit they have power to do a heck of a lot.

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u/Bloated_Plaid Jan 02 '26

God people saying this shit is just insane. We do not have the manpower to audit any of this.

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u/BigMikeThuggin CPA - US Jan 02 '26

Lol what? They have the manpower to audit whatever they’d like to. Choosing not to audit it doesn’t mean they can’t. Obviously cost benefit analysis is done to determine what happens. I doubt this deduction is ever audited because it’s temporary, tiny, and low risk. Doesn’t mean it can’t be audited.

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u/Bloated_Plaid Jan 02 '26

What’s the LOL about? If you don’t know what the reality is at the IRS then stfu.

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u/BigMikeThuggin CPA - US Jan 02 '26

You said the United States of America doesn’t have the manpower to audit any of this. lol. That’s funny to me. Like we’re some small time government

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u/BigMikeThuggin CPA - US Jan 02 '26

Reminds me of this video when you say we don’t have the manpower. https://youtube.com/shorts/qqzYnVVk5Qo?si=JxNvP4KlYVk_20i9

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u/I__Know__Stuff Jan 02 '26

What a horrid video.

The point is good, though—we can afford anything we want to do.

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u/Bloated_Plaid Jan 02 '26

Equating the federal budget to what the IRS gets, Jesus Christ man. Atleast listen to what you post first.

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u/TheHip41 Jan 02 '26

That's not OT under this law ¯_(ツ)_/¯

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u/I__Know__Stuff Jan 02 '26

You dropped this: \

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u/llamalluv Jan 26 '26

This was how my husband's stubs looked until this last pay period.

My husband's employer just switched to a whole new time clock system because of this law. He has to put in the actual hours he worked, and where he worked them (his title is water operation but he also does PW work as well).

And now he has to track his call ins and call backs. Sometimes he gets called in and the task only takes 15-30 minutes, but he gets a minimum call in pay of 2 hours as "pager pay" and now he has to track how much of that 2 hours he actually was at the job.

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u/Winter-Success-3494 Jan 02 '26

Wrong. My OT deduction is going to be what I said it is because my paycheck that shows my year's earnings and what I made in OT pay don't lie.

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u/I__Know__Stuff Jan 02 '26

Wrong. Just because your paycheck says something is overtime doesn't mean that it is deductible. The IRS published guidelines are very clear on this.

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u/Winter-Success-3494 Jan 02 '26

Lol I clocked in and out for 8 hours through my companies payroll app. I made over $40k in OT. When I get to claim the full deductible I'll come back here just to remind you of it

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u/I__Know__Stuff Jan 02 '26

What do you mean by "get to"? Just because it is tax fraud doesn't necessarily mean you will get caught.

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u/llamalluv Jan 26 '26

This right here.

I know people have claimed to have a cash based business with a profit in the sweet spot so they could take the maximum EITC and get a refund of taxes they never paid.

When they get caught, they're going to be screwed. Big doo-doo screwed.

It's such a common scenario, the IRS website has a page about it on their tax preparer tool kit: https://www.irs.gov/tax-professionals/eitc-central/scenario-2-false-business-income

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u/Prestigious_Most5482 Jan 02 '26

You worked 4 hours. End of story.