How To Deduct Alabama State Overtime in FTUSA?

Question

Hello!

Aside from the federal side, overtime is exempt from being taxed in Alabama for the first half of the year (up to June 30th). FTUSA didn't prompt me in any way regarding my Alabama state taxes regarding this. How can I make sure I'm not paying state tax on the overtime I earned in the first half of the year? Thank you!

GeorgeM · Accepted Answer

Hello Sirrealist:

As per the Alabama Department of Revenue, your employer should not have included any of your exempt overtime compensation in Box 16 of your W-2.  If they did, you will likely need to obtain a corrected W-2 from your employer.

You correctly indicated that the exemption for overtime compensation extends only until June 30, 2025, after which time the exemption for overtime compensation no longer applies.

Additionally, the AL Department of Revenue has stated that employers are still required to report exempt overtime compensation in Box 14 of the W-2 with the designation “EX OT WAGES.”  Therefore, review Box 14 on your W-2 and if it includes an amount with the designation “EX OT WAGES,” it’s likely that your employer already excluded this amount from your wages reported in Box 16.  However, you might consider double checking with your employer to make sure your Box 16 wages does not also include your exempt overtime compensation.  Assuming your employer correctly reported your wages in Box 16 of your W-2 (meaning your exempt overtime compensation has already been deducted from your wages reported in Box 16) then AL is not taxing your overtime compensation.