The Overtime Deduction on a 2025 Return Without a W-2 Amount

First, check whether you already have the number

Before using any method, look for a figure your employer gave you:

• W-2 box 14. Some employers chose to show qualified overtime there for 2025. The Form 1040 instructions say you can generally rely on that amount, and the other methods don’t apply.
• A separate statement or payroll portal entry for the 2025 “FLSA overtime premium.”
• An answer from your employer. The instructions say that if you ask for your FLSA overtime premium, you can rely on what you are given.

Two checks apply to any number. You must be covered by the FLSA and not exempt from its overtime rule; Notice 2025-69 asks you to make a reasonable effort to find out, which can mean asking your employer. And the amount must be overtime paid in 2025. Notice 2025-69’s own example: pay for the December 14–27, 2025 pay period that was not paid until January 6, 2026 does not count toward 2025.

The Notice 2025-69 methods, with numbers

If no employer figure exists, Notice 2025-69 lists reasonable methods. Methods A to D start from a statement covering all of 2025, such as your last pay stub’s year-to-date column; Method F is for when you have no such statement.

The B, D and F figures come from the engine; the C and G figures are the IRS’s own examples. Rows A through D describe the same overtime from four angles, and all four arrive at $5,000.00, because each one isolates the FLSA half and nothing more.

Why one-third and one-fourth? At time-and-a-half, every overtime dollar is two parts straight pay and one part premium. At double time it is two parts straight pay and two parts extra, but only one of those parts is the FLSA premium.

Public-sector comp time is counted when it is paid, not earned. The IRS example: $4,500 of wages for comp time taken in 2025 gives $1,500 of qualified overtime.

Method F, step by step

Method F is the one most hourly workers end up using, because many pay stubs show only “OT hours” and “OT pay” per check, or nothing year-to-date.

1. Find your hours over 40 in each workweek. Use your own time records or the hours on each stub. A bi-weekly stub can hide a 30-hour week and a 50-hour week; only the 50-hour week has overtime.
2. Find the regular rate. For straight hourly pay with no extras, it is your hourly rate. If a nondiscretionary bonus or shift differential applied, the regular rate is higher; the regular rate guide shows how.
3. Multiply hours over 40 × regular rate × ½. For $22.00 and 300 hours, the engine gives $3,300.00.
4. Ask your employer anyway. Notice 2025-69 lists asking the employer as a reasonable method, and its figure may be more exact than yours.

Where it goes on Schedule 1-A

Schedule 1-A Part III turns the amount into a deduction.

1. Line 14a: qualified overtime included in W-2 box 1, worked out by the method you chose. With more than one employer, the worksheet for qualified overtime from more than one employer in the Form 1040 instructions adds them up, and Notice 2025-69 lets you use a different method for each employer.
2. Line 14b: qualified overtime included on a Form 1099-NEC or 1099-MISC, if any.
3. Line 15: the smaller of line 14c or $12,500 ($25,000 if married filing jointly).
4. Lines 16–20: the phase-out, $100 for each full $1,000 of MAGI over $150,000 ($300,000 joint), with partial thousands dropped.
5. Line 21: line 15 minus line 20, never below zero. That is your deduction, which joins the other Schedule 1-A deductions on line 38 and Form 1040 line 13b.

Married filing separately can’t take it, and you need a Social Security number valid for employment. A quick engine run: single, $15,000.00 of time-and-a-half overtime pay, MAGI $65,000. Method B gives $5,000.00, there is no phase-out at that income, and line 21 is $5,000.00.

Records to keep

Notice 2025-69 says individuals must keep copies of any documents they rely on, and the Form 1040 instructions repeat it at line 14a. In practice that means:

• the last 2025 pay stub with year-to-date totals, or every stub if there is no year-to-date overtime line;
• any employer statement, portal printout or email giving the FLSA premium;
• your own time records showing hours per workweek, if you used Method F;
• a short note of the method you used and the arithmetic.

How long? The IRS’s general rule for income tax records is to keep them until the period of limitations for that return runs out, generally 3 years after filing in the ordinary case, with longer periods in the situations it lists. The time records guide covers what your employer must keep on its side.

If the IRS sends a CP321Q or CP321P

The IRS publishes pages for two notices about 2025 Schedule 1-A claims. CP321Q says its initial review suggests you may have claimed too much qualified overtime. CP321P says the same about both tips and overtime. Both pages ask you to review your return and, if you made an error, to file an amended return, and they note that an amended federal return may mean amending a state return too.

A notice is a request to check, not a final decision. Compare the notice with the documents you kept: was the worker FLSA-eligible, did you count only the premium, only 2025 pay, and only hours over 40 in each workweek? The IRS decides the outcome; a tax professional can review your records with you.

2026 works differently

For 2026 through 2028, the deduction is limited to the amount your employer reports in W-2 box 12, code TT. FS-2026-13 (Q20) says no relief is available for tax years after 2025, so the self-computed methods above end with the 2025 return. If a 2026 W-2 seems to understate the amount, the route is a corrected W-2c from the employer.

Next step

Put your 2025 numbers into the no tax on overtime estimator. Pick the method that matches your stub (premium, time-and-a-half total, double-time total, or rate and hours), and it applies the cap and the full-$1,000 phase-out. The estimator gives an estimate, not tax advice; for your return, the IRS and a tax professional decide.