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Tie-Out Press · Current as of 4 October 2026.
Your employer or bookkeeper may have sent you this page because box 12 of your 2026 Form W-2 shows an amount next to the letters TT, and that amount is well below the overtime on your pay stubs. That is how the figure is defined. Code TT does not report your overtime pay. It reports one part of it.
When you work more than 40 hours in a workweek, federal law (section 7 of the Fair Labor Standards Act) requires overtime at one and a half times your regular rate. Code TT reports only the extra half, the "and-a-half" part, added up for the year (2026 General Instructions for Forms W-2 and W-3; IRC §225(c)(1)). The rest of each overtime hour is straight-time pay at your regular rate, and it is not in code TT. The whole amount, both parts, is still in your wages in boxes 1, 3 and 5.
The calculation for each week is: hours worked over 40, times one-half, times your regular rate (IRS Fact Sheet 2026-13, Q12). Your regular rate can be higher than your hourly rate, because a nondiscretionary bonus counts toward it (29 CFR 778.208).
This example is published by the Department of Labor in its overtime regulations (29 CFR 778.110(b)).
| Inputs | Step | Result |
|---|---|---|
| $12.00 an hour; 46 hours worked | Pay for all 46 hours at $12.00 | $552.00 |
| $46.00 production bonus that week | $552.00 + $46.00 | $598.00 |
| Regular rate: $598.00 ÷ 46 hours | $13.00 | |
| Hours over 40 | 6 | |
| Overtime pay: 6 hours × $19.50 (one and a half times $13.00) | $117.00 | |
| Total pay for the week: 40 × $13.00 + 6 × $19.50 | $637.00 | |
| Code TT for this week | 6 hours × 0.5 × $13.00 | $39.00 |
The overtime line on that pay stub is $117.00. The code TT amount for the same week is $39.00: the half-time part only. That gap is the definition at work, not an error.
Only the overtime the federal law requires counts. Overtime paid under a state law, a union contract or an employer's own policy, beyond what the federal law requires, is not included (FS-2026-13 Q16). The IRS's examples are overtime for hours beyond 8 in a day, beyond 35 in a week, or on a weekend or holiday. Its worked example is a double-time week, in which only the time-and-a-half part counts.
Paid time off does not count as hours worked. Holiday, vacation and sick hours do not push a week over 40, even if your payroll paid them at an overtime rate (29 CFR 778.218(a)).
Each workweek stands on its own. A 50-hour week and a 30-hour week do not average out (FS-2026-13 Q13).
Overtime counts in the year it is paid, not the year it is worked (FS-2026-13 Q3). Overtime from the last week of December 2026 that is paid in January 2027 belongs on next year's W-2.
An employee who is exempt from federal overtime rules, or not covered by them, has no qualified overtime, whatever extra pay the employer gave (FS-2026-13 Q1, Q4). The same is true of an owner with 20% or more of the business who is active in managing it (Q5).
It is not your deduction. Your employer reports the full qualified amount, even if it is more than you can deduct (FS-2026-13 Q10).
It is also not something you can add to later on your own. From 2026, an employee can deduct only qualified overtime that the employer included in box 12 under code TT, and a Form 4852 substitute does not fix an amount left off (FS-2026-13 Q20, Q23). An amount reported too high cannot be deducted at the higher figure (Q21).
The deduction for qualified overtime is claimed on your own federal return and has its own rules (IRC §225; IRC §63(b)). These are its limits as the statute sets them:
| Rule | What the statute says |
|---|---|
| Years | Tax years 2025 through 2028 only |
| Most you can deduct | $12,500; $25,000 on a joint return |
| Income phaseout | The deduction is reduced by $100 for each $1,000 of modified adjusted gross income over $150,000 ($300,000 on a joint return) |
| Married taxpayers | Must file jointly; married filing separately cannot claim it |
| Social Security number | A work-valid number is required |
| Itemizing | Available whether or not you itemize; it does not reduce adjusted gross income |
The form for the deduction is Schedule 1-A (Form 1040), with its instructions. When our rules reference was last updated on this point, on 17 September 2026, the 2026 Schedule 1-A had been posted only as a draft, watermarked as not for filing, and its 2026 instructions had not been published. Until the final form and instructions are out, the details of the 2026 form are not settled.
About the code TT amount itself: your employer, or whoever prepares the W-2s for your employer. If the amount is wrong, the correction is your employer's to make, on Form W-2c, as soon as possible (FS-2026-13 Q11).
About your deduction: the instructions for Schedule 1-A (Form 1040), or a tax professional who prepares your return. This page does not explain how to complete your return.
This page is published by Tie-Out Press, which sells the Qualified Overtime Kit, a workbook bookkeepers use to compute this figure, and a free spot check for one workweek.
This page is general information. It is not tax, legal, accounting, or payroll advice, and it is not a substitute for advice from a qualified professional who has reviewed your specific facts. Overtime, regular-rate, and tip-credit rules vary by state and by the terms of employment.
Tie-Out Press is not affiliated with, endorsed by, or connected to the Internal Revenue Service, the Department of the Treasury, the Department of Labor, or any government agency. No government agency has reviewed or approved this product.
No guarantee is made regarding the accuracy of any output for a particular set of facts, the treatment of any return by any tax authority, or the avoidance of penalties, audits, or assessments.
Statutory and regulatory references are current as of 2 October 2026 and are maintained in the change log.
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Tie-Out Press publishes the Qualified Overtime Kit, which reconciles the qualified overtime figure an employer reports in box 12 of the W-2, under code TT. It is a calculation tool, not tax or legal advice.
Publisher postal address:
Tie-Out Press, an imprint of Aeon Aurora LLC 377 Valley Rd, Unit 3131 Clifton, NJ 07013Publisher email, for refund requests with the order number, upgrade requests, and FIGURE CHECK reports: support@tieoutpress.com. Company page: https://www.linkedin.com/company/tie-out-press.