Some employer overtime policies include hours paid that are not work hours (such as paid time-off for sickness, or holidays) in their overtime calculations. Employers are not to include non-worked time in figuring qualified overtime amounts to be reported. Further, employers have traditionally shown the totals as one overtime amount on a pay slip. Finally, while payroll operations update their reporting requirements, the withholding methods (at least not yet) do not carve out any overtime amounts from taxes withheld from pay; the deduction is taken annually (until the provision expires after tax year 2028) by the individual on their return, based on the amount the employer provides on Form W-2, box 12, using code TT. Be sure to include these points in the communication plan. Tip Income Reporting Unlike the overtime pay provision, an infrastructure for reporting tips is already in place on Form W-2 and other forms. For 2026, however, there is a requirement to report tip amounts on Form W-2 in Box 12, using code TP, and another new box, Box 14b, to report the Treasury Tipped
The U.S. Treasury was required under the law to develop tip occupation codes so those not working in designated
Occupation Codes (TTOC). The U.S. Treasury was required under the law to develop tip occupation codes so those not working in designated tipped occupations are prevented from qualifying for the deduction. There are more than 70 codes employers can display in Box 14b. Employers are told to separate amounts received by TTOC code on the W-2 for workers in more than one tipped occupation. Because this is likely to cause confusion among tipped employees, effective communication about the codes and amounts should be considered as part of year-end planning. tipped occupations are prevented from qualifying for the deduction.
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ISSUE 28 GLOBAL PAYROLL MAGAZINE
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