Payroll overtime totals need a separate calculation before they can fill code TT on the 2026 W-2
IRS instructions for the 2026 W-2 limit Box 12 code TT to the half-rate premium on FLSA-required overtime, one-third of time-and-a-half pay. A register's overtime total cannot be copied into the box, CPA Practice Advisor reports.
The Investor · Invest desk
Two bars. In a time-and-a-half case, $1,604 of $4,812 in overtime earnings is code TT. In the IRS Q16 double-time example, $100 of the $400 paid for the overtime hours is code TT.
- Code TT, time-and-a-half pay, claim 3 1,604 of 4,812 dollars of overtime pay 33% computed
Code TT, time-and-a-half pay The whole
- Code TT, Q16 double-time pay, claim 5 100 of 400 dollars of overtime pay 25% computed
Code TT, Q16 double-time pay The rest of the 400
| Share | Part | Whole | Percent | Claim |
|---|---|---|---|---|
| Code TT, time-and-a-half pay | 1,604 dollars of overtime pay | 4,812 dollars of overtime pay | 33% (computed) | 3 |
| Code TT, Q16 double-time pay | 100 dollars of overtime pay | 400 dollars of overtime pay | 25% (computed) | 5 |
What happened
- FS-2026-13, the IRS fact sheet of August 2026, states the computation in Question 12: FLSA hours worked over 40 in the workweek, times one-half, times the FLSA regular rate.
- In a holiday week, 36 hours worked plus an 8-hour paid holiday makes 44 hours paid, and the four hours of overtime carry $40 of premium but no code TT.
- A semi-monthly register splits one 45-hour workweek into 27 and 18 hours, shows no overtime in either period, and misses $60 of premium owed at a $24 rate.
Why it matters
- cost Payroll has to keep hours worked by employee and by workweek, not only pay-period overtime totals, and run the Section 7 test on each week before the register can feed Box 12.
- exposure An employer whose system pays overtime after 40 paid hours has premium dollars in the register that the box will never carry, and the variance builds with each holiday week.
- decision Someone must own the hours-worked data, because the register holds hours paid and Q14 says the regular rate and amount due cannot be determined without hours worked.
The register's overtime line is the whole payment for the overtime hours, at whatever multiple the employer pays [13]. Code TT is narrower, and the statute behind it applies two filters to every line: the compensation must be overtime compensation "required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate." [1] The 2026 General Instructions for Forms W-2 and W-3 compress that to the "half" portion of "time-and-a-half" compensation [2].
How far the box sits below the register depends on the multiple. In the time-and-a-half case, $3,208 of the $4,812 line falls outside code TT, two-thirds of it [15]. In the fact sheet's own double-time example the gap is $300 of $400, or 75% [16]. According to CPA Practice Advisor's account of FS-2026-13, $200 of that line is straight time and $100 is a premium the FLSA did not require, leaving $100 for the box [5]. Question 1 of the fact sheet says overtime not required by the FLSA is not eligible for the deduction [6].
The hours matter as much as the rate. Daily premiums past eight hours, weekly premiums that start at 35 hours, and weekend or holiday premiums count only to the extent they were credited toward the Section 7 obligation, whether paid under state law, a collective bargaining agreement or the employer's own policy [7]. Take a daily overtime rule and an employee who works four 10-hour days. That week carries eight hours of daily premium but never crosses 40 hours, so the Q12 formula leaves nothing to report [8]. Pay for a holiday, vacation day or sick day is not pay for hours of employment and cannot be credited toward overtime due, according to 29 CFR 778.218(a) [14].
The test also runs on the workweek, not the pay period. A workweek is a fixed, recurring 168 hours that begins on any day and hour the employer sets, and each one stands alone with no averaging across two or more [11]. A semi-monthly register cannot see a week that straddles two periods [12].
In our view the workable control is to rebuild code TT from hours worked by workweek and to expect a variance against the register. The counter-case is narrow. Dividing the register line by three ties to the box only for a worker on one hourly rate who gets time-and-a-half past 40 hours and nothing else that week, and the source calls that the only case where the two agree [3]. A double-time premium, a daily overtime rule or a semi-monthly register each takes an employer outside it [5][8][12].
What to watch
- Any IRS revision to FS-2026-13 Questions 12 to 16 that changes the premium formula or how daily-overtime premiums are credited toward Section 7.
- Whether payroll vendors build code TT from hours worked by workweek or export the overtime column, which will show when 2026 W-2s are prepared.
- How employers with daily, weekend or holiday premium rules document which premium hours were credited toward the Section 7 obligation.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence72
- Adoption
- Insufficient
- Hype gap−5
- Incentives
- Insufficient
- Confidence68
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Box 12, code TT reports qualified overtime compensation, defined in 26 USC 225(c)(1) as overtime compensation "required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate."
- [2]
The 2026 General Instructions for Forms W-2 and W-3 say only the "half" portion of "time-and-a-half" compensation is reported using code TT.
- [3]
For an employee paid time-and-a-half on a single hourly rate for hours over 40, with no other pay in the week, overtime earnings of $4,812 carry $1,604 of code TT, one-third; this is the only case where the register and the box agree once the line is divided by three.
- [4]
FS-2026-13, the IRS fact sheet of August 2026, states the formula in Question 12: FLSA hours worked in excess of 40 in the workweek, times one-half, times the employee's FLSA regular rate.
- [5]
In the Q16 example of FS-2026-13, an employee at $20 an hour works 50 hours and the employer pays double time: $400 for the 10 overtime hours. Section 7 required $300, which is $200 of straight time plus $100 of premium at half the regular rate. Code TT is $100. The other $100 is overtime compensation the FLSA did not require.
- [6]
Q1 of FS-2026-13 says overtime not required by the FLSA is not eligible for the deduction.
- [7]
Q16 names premiums for hours beyond eight in a day, beyond 35 in a week, or on a weekend or holiday, whether paid under a state law, a collective bargaining agreement, or the employer's own policy; these count only to the extent they were credited toward the Section 7 obligation.
- [8]
A four-day week of 10-hour days under a daily overtime rule produces eight hours of daily premium and no hours over 40, and on Q12's formula that week has nothing to report.
- [9]
Q14 of the fact sheet says the regular rate and the amount due cannot be determined without FLSA hours worked, and sends the reader to the Department of Labor's guidance on what counts.
- [10]
A payroll configured to pay overtime after 40 paid hours pays a premium the FLSA never required whenever a holiday falls in the week. Thirty-six hours worked plus an eight-hour paid holiday is 44 hours paid and 36 worked; the four hours of overtime carry $40 of premium at a $20 rate, and code TT for the week is zero.
- [11]
Per Q13, a workweek is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods, beginning on any day and at any hour the employer establishes, and each workweek stands alone, with no averaging over two or more.
- [12]
An employee working nine hours a day, Monday to Friday, with Monday to Wednesday in the first semi-monthly period and Thursday and Friday in the second, shows 27 hours in one period and 18 in the next; neither reaches 40, but the workweek reaches 45 and five hours of overtime are owed, $60 of premium at $24 an hour. A semi-monthly register cannot see this.
- [13]
The overtime line on a register is the whole payment for the overtime hours at whatever multiple the employer uses; only the premium, and only the premium the FLSA required, is reported.
- [14]
29 CFR 778.218(a) says payments for a holiday, vacation day or sick day are not made as compensation for hours of employment, may be excluded from the regular rate, and cannot be credited toward overtime due.
- [15]
In the $4,812 time-and-a-half case, $3,208 of the overtime line falls outside code TT, two-thirds of the line.
- [16]
In the Q16 double-time example, $300 of the $400 overtime line falls outside code TT, 75% of the line.
Sources
1 independent publisher whose own reporting we read for this story.
- cpapracticeadvisor.comWhen Box 12, Code TT Will Not Tie to the Payroll Register
1 article · October 13, 2026
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