Important for 2026: Starting with tax year 2026, employers must separately report qualified overtime and tips on Form W-2. Without this reporting, employees cannot claim the deductions.

New Box 12 Codes

Code TT

Qualified Overtime Compensation

The "half" portion of time-and-a-half overtime pay required under FLSA

Code TP

Qualified Tips

Cash tips in qualifying occupations reported to employer

What Employers Must Report

For Code TT (Overtime)

Amount: Total qualified overtime compensation paid during the year
Calculation: Overtime hours × 0.5 × regular rate of pay
No cap: Report full amount even if it exceeds the $12,500/$25,000 deduction limit
Only FLSA overtime: State-only or contractual overtime beyond FLSA requirements should not be included

Employer Example

Employee earns $20/hour and works 200 overtime hours in 2026.

Total overtime pay: 200 × $30 = $6,000
Qualified overtime (Code TT): 200 × $10 = $2,000
This is reported even though $2,000 is well below the cap

For Code TP (Tips)

Amount: Total qualified cash tips reported to employer
Includes: Credit card tips, tip pool distributions
Excludes: Automatic gratuities, service charges, non-cash tips
New Box 14b: Treasury Tipped Occupation Code(s) must also be reported

New Box 14b: Tipped Occupation Code

Starting in 2026, employers must also report the worker's Treasury Tipped Occupation Code (TTOC) in the new Box 14b. This is a 3-digit code from the IRS list of qualifying occupations.

Examples: 101 (Bartenders), 102 (Wait Staff), 301 (Baggage Porters), 802 (Taxi Drivers)

Timeline: 2025 vs. 2026+

Aspect	Tax Year 2025	Tax Year 2026+
W-2 Box 12 codes	Not required (transition relief)	Required (TT, TP)
Box 14b (TTOC)	N/A	Required for tips
Deduction claim	Can estimate per Notice 2025-69	Must match W-2
Employer penalties	Waived (Notice 2025-62)	Standard §6721/6722

What If My W-2 Is Wrong?

Missing or Understated Amount

Contact your employer's HR or payroll department immediately
Provide documentation of your overtime hours or tips
Request a Form W-2c (Corrected Wage and Tax Statement)
Once you receive the W-2c, you can claim the correct deduction

Overstated Amount

If your employer reported more qualified overtime/tips than you actually received, you can only claim the actual amount you were paid—not the overstated W-2 amount.

Cannot Use Form 4852

Unlike other W-2 issues, you cannot use Form 4852 (Substitute for Form W-2) for qualified overtime. The statute requires amounts to be "included on statements furnished pursuant to section 6051(a)(19)"—which means the actual W-2.

For Employers: Compliance Checklist

☐ Update payroll systems to track qualified overtime separately
☐ Identify FLSA overtime-eligible employees vs. exempt employees
☐ Calculate qualified overtime using the formula: OT hours × 0.5 × regular rate
☐ Track qualified tips separately from service charges
☐ Assign Treasury Tipped Occupation Codes to tipped employees
☐ Test W-2 generation for new Box 12 codes TT and TP
☐ Test Box 14b for TTOC reporting

W-2 Box Changes for 2026: New Overtime & Tips Reporting