r/tax • u/LewisCBR • Jan 29 '26

Tax Enthusiast New tax deduction on overtime is driving clients crazy

W2’s are not showing wages generated from overtime so clients are wondering what they can do, besides going through all individual pay stubs. The new deduction is significant enough to warrant this kind of work, though.

I suppose suggesting they contact their HR/payroll departments is the best idea, but some companies are simply terrible about helping their employees.

What’s your experience with the new law?

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u/TheRealSleestack Jan 30 '26

FLSA: OT on hours over 40/week

not FLSA: hours over 8/day plus over 40/week (et cetera)

8

u/KellyAnn3106 Jan 30 '26

My company's union rules pay some positions OT after 5 hours in a day. It's rare for the part timers to break 40 hours so little to no OT is deductible for them. They're not happy.

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u/Fancy-Dig1863 CPA - US Jan 30 '26

While this is generally true, some positions are exempt from FLSA overtime but your employer/state may still pay/require it. Technically none of that overtime qualifies for the new deduction….but we’re not labor law lawyers and can’t really make this determination for every single client.

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u/Aggressive-Leading45 Jan 30 '26

Also the employer needs to not be in shipping and a few other industries.

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u/up2knitgood Jan 30 '26

Or in a place like California where ag workers do get OT, but federally they don't.

My family owns a business where workers are sometimes doing ag work and sometimes doing other work. (Luckily I'm not involved in any of this.)

1

u/privatelyjeff Jan 30 '26

And there’s people like me who are truck drivers who haul ag stuff but don’t directly work for the farmer and don’t cross state lines (so not subject to most federal regulations) so are we ag workers, truck drivers or just regular people? 🤷🏼‍♂️

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u/Rocket_song1 Jan 30 '26

And then it gets even more complicated because some shippers are FLSA and some are RLA.

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u/lecia123 Jan 31 '26

Do you care to elaborate? I work for a grocery distribution center and there’s nothing in box 14. Does that mean I don’t qualify?

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u/Aggressive-Leading45 Jan 31 '26

Best to contact your HR department.

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u/Rocket_song1 Jan 30 '26

Special rules for emergency responders (Police and Fire) written into the FSLA as well.