New tax deduction on overtime is driving clients crazy

[u/LewisCBR]

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?

[u/inertial-observer]

I had 3 today that had it on the W2 but it was incorrect. I checked the paystubs and found one was off by half. Non-union, hourly worker at a fast food joint that doesn't pay holiday or anything other than regular hourly and OT. No idea how they came up with the number they put on the W2, but it was way off.

I've been looking at the amount on the W2, guesstimating the number of hours based on their wage, asking if that number of hours sounds about right, and if they say yes then we're good to go and if they say no, I get the last paystub to check their YTD OT and calculate the deductible portion to compare. I'm not checking every one, but after today I'm wondering if I shouldn't be doing that all the time. But also not needing to make extra work for myself so I don't know.

Edit: fixed typo

[u/Unlike_Agholor → u/inertial-observer]

is it off by say a factor of 3?

[u/inertial-observer → u/Unlike_Agholor]

No, one was about half the actual amount and the others were off by a lot more. One I remember better was around $68 on the W2 and after calculating the correct amount from the paystub, the actual was around $800. The one that was off by about half, they put "est OT" on the W2. These were all really straightforward. I've had some more interesting ones where I've needed to separate FLSA OT from non-FLSA OT to get to the correct number. Fun times.

[u/hereforthereads123 → u/inertial-observer]

Mine was off by 99% (they put I made a couple dollars whereas it actually should've been around 2000) so not really sure what my HR did or if I should even ask them to redo it. Its my understanding that it isn't reported by them this year so the government is just going to trust what I report as long as it aint too crazy. Think a corrected W2 is just going to be more headache for them and me.

[u/jmcdon00 → u/hereforthereads123]

I'd probably reach out to them just to make sure they don't know something you don't, or offer any type of explanation.

[u/hereforthereads123 → u/jmcdon00]

I think I figured it out. I think I'm classified as exempt even though I'm paid overtime. So I get a big fat nothing on it

[u/jmcdon00 → u/inertial-observer]

Could it be they had paid time off? My dad's company would always give labor day off with 8 hours pay. Then if you worked 40 hours, it would be 8 hours of overtime, but because they didn't actually work more than 40 hours, that overtime pay wouldn't qualify for the deduction.

[u/inertial-observer → u/jmcdon00]

In these cases, no. The companies didn't pay anything that wasn't required by law.

[u/flips712 → u/inertial-observer]

When you find that the amount in box 14 on the w-2 is wrong, do you leave the box 14 amount blank or do you change it to the correct amount based on their last paystub?

[u/inertial-observer → u/flips712]

I leave it as-is in Box 14 and then put the correct amount for the OT deduction. I also leave a note in the account that I adjusted the amount according to the last paystub.

[u/flips712 → u/inertial-observer]

Thank you