Are You Properly Tracking Qualified Overtime & Qualified Tips in Quickbooks for Obbba Reporting?
One Big Beautiful Bill provides for the possible deduction of overtime pay and/or qualified tips on individual tax returns through 2028 and also requires employers to report these items on each applicable employees’ W-2 for tax years 2026 - 2028.
Qualified Overtime pay is overtime pay mandated by Fair Labor Standards Act (FLSA) – paid overtime at ‘time and a half’ for hours physically worked over 40 in a work week. It is the ‘half’ in the ‘time and a half’ and also known as Overtime Premium.
Overtime Pay other than that mandated by FLSA is not always qualified and must be reviewed before considering for tracking. An example could be paying overtime based on the number of hours worked in a given day versus a given week.
Qualified Tips are voluntary tips received from customers. Any charges automatically added to customers’ bills are not qualified and should not be considered in the tips tracking. A Tipped Occupation Code is also included in the ‘Tip Tracking.’
Quickbooks (Desktop or Online) can track these items throughout the year and report in the appropriate fields on the employee W-2s.
There are specific steps to follow to enable your Quickbooks to track these amounts.
Quickbooks articles discussing these setups can be found via the links below.
If you have further questions regarding the Qualified Overtime or Qualified Tips enacted by the One Big Beautiful Bill please reach out to our Accounting Services Team.
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