The reported amount is not the deduction
An employer reports total qualified overtime compensation even when it exceeds $12,500 or $25,000. The taxpayer separately applies the annual cap, MAGI phaseout, filing-status rule, and SSN requirement.
2026 overtime reporting
W-2 code TT and qualified overtime records
Tax year 2026 begins mandatory separate reporting for qualified overtime compensation. Most employees should look for code TT in Form W-2 box 12 before calculating the return deduction.
Use the tax statement actually furnished for 2026. The 2025 transition-year approximation methods do not authorize a taxpayer to create an unreported 2026 amount.
| Document | 2026 location | Action |
|---|---|---|
| Form W-2 | Box 12, code TT | Use the properly reported qualified overtime amount, then apply return limits. |
| Form W-2c | Corrected wage statement | Request it when code TT is omitted or incorrect. |
| Form 1099-MISC or 1099-NEC | Specified qualified-overtime field | Applies only in the limited cases where that form is the proper reporting statement. |
| Form 4852 | Substitute W-2 | The IRS says it does not satisfy the section 225 statement requirement for this deduction. |
Correct errors before filing
If code TT is too low or missing, ask the employer for Form W-2c. After 2025, a taxpayer cannot add an omitted amount independently when the required statement does not properly report it. If code TT is too high, claim no more than qualified overtime actually paid.
Keep the supporting trail
Retain the W-2 or W-2c, payroll statements showing overtime hours and rates, and employer records that explain the regular rate and qualified premium. This practical file supports reconciliation with code TT.
Employer recordkeeping context
DOL Fact Sheet #21 states that covered employers generally preserve payroll records for at least three years and records used to compute wages for two years. Those records include hours worked, the basis of pay, total wages, and overtime earnings. The tax-reporting requirement is separate, but both records help explain the amount furnished to the worker.
For 2026, the general W-2 instructions identify box 12 code TT as the total amount of qualified overtime compensation. Transition penalty relief and reasonable approximation methods discussed for tax year 2025 should remain labeled as 2025-only material.
Sources: IRS FS-2026-13, 2026 General Instructions for Forms W-2 and W-3, 26 USC Section 6051, and DOL Fact Sheet #21. Last reviewed 2026-08-16.