so needing some clarification with this whole no tax on overtime thing. our cba at work has us getting overtime after 35 hours a week. ive made a couple calls to some free tax help that i found online including turbo tax and all the agents are pretty clueless. shit i even called the irs and after finally being able to talk to a real person she was also clueless saying "ive heard of no tax on tips but never no tax on overtime" she finally looked it up and found it she then responded by saying "we dont offer live assistance for that". so ive tried to some research myself and just see that for the overtime to qualify it must fall under the flsa which is overtime over 40. in that regard are we only able to claim the overtime that is over 40 hours? brought this up around the guys at work today and told them i don't think we can claim overtime hours that arent over 40 hours but some of them believe that our cba supersedes the flsa. so im kinda in a slump right now and just thinking about going to a tax person that hopefully knows what they are doing. also what happens if these people claim the overtime thats under the 40 hours? nothing? slap on the wrist? thanks for the help
Posted by Quiet_Fisherman_8812
3 Comments
It’s only the overtime over 40 hours a week that is eligible. Not any other negotiated pay. And only 50% your regular rate. Even if you are paid double time.
No way to say what happens to those that report this wrong as this is the first year ever for this deduction. We have no past history to look at to say how audited it will be.
Only FLSA overtime is allowed, which is time and a half adapter 40 WORKED HOURS per week.
Only the overtime premium – the half in time and a half – is deductible.
> in that regard are we only able to claim the overtime that is over 40 hours?
Yes. Read IRS Notice 2025-69, page 10-11 for how the No Tax on Overtime works with CBA overtime. [https://www.irs.gov/pub/irs-drop/n-25-69.pdf#page=10](https://www.irs.gov/pub/irs-drop/n-25-69.pdf#page=10)
Basically, if you work 40 hours in a week, you’ll get 5 hours of CBA overtime, but none of that will count toward the No Tax on Tips deduction calculation.
If you work 45 hours in a week, you’ll get 10 hours of CBA overtime, but only 5 of those hours will count toward the No Tax on Tips deduction *calculation*.
As other people have correctly mentioned, only a portion of what you get paid for overtime counts for the deduction (generally 1/3), so I won’t repeat that. That information is also discussed in the link.