Overtime Deduction

BGaspard
BGaspard Member Posts: 2 Newcomer
in Credits/Deductions

Are salaried employees eligible to receive the OBBBA overtime deduction even though we are paid straight salary with no extra pay for overtime?

Answers

  • Taylor
    Taylor FreeTaxUSA Agent Posts: 23 image
    edited January 28

    Hello BGaspard,

    Generally, no. The overtime deduction is specifically for qualified overtime pay received by nonexempt employees under the Fair Labor Standards Act (FLSA). To qualify, you must receive premium pay, the extra “half” portion of time-and-a-half overtime compensation, for hours worked beyond the FLSA threshold (typically 40 hours per week for most workers).

    Your employer can confirm if you're classified as a covered, nonexempt employee under the FLSA. Most salaried employees are considered "exempt" from overtime requirements, which means they wouldn't qualify for this deduction.

    We have a great article that goes into further depth on this:

    Community Article - Do I qualify for the new overtime pay deduction?

    https://community.freetaxusa.com/kb/articles/241-do-i-qualify-for-the-new-overtime-pay-deduction

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