New 2026 Qualified Overtime

You're on the right track, @Shari15.

Managing multiple pay rates, out-of-town work with varying taxes, and diverse labor types requires manually adding payroll items to your employees.

Start by selecting the correct tax tracking type when creating the company contribution payroll item. Once the amount is calculated, enter it and add the tracking item to your employees.

Here's how:

1. Go to Employees and click on Employee Center.
2. Find the employee’s name and double-click on it.
3. Go to Payroll Info.
4. In the section for Additions, Deductions, and Company Contributions, add the contribution item.
5. Enter the amount for each period and the maximum limit.
6. Click OK to save.

For additional information on the process, read the section titled "If you use pay types other than our embedded overtime items" in this article: Impact of the No Tax on Overtime provision to QuickBooks Payroll. 

You can also reach out to your accountant for further help. They can assist you in tracking the limit amount effectively. 

Please let us know if you have more questions. We're here to guide.

Hello there, @Shari15.

I just wanted to follow up to check if the resolution we provided helped resolve your issue. Please let us know if everything is now working as expected or if you still have any questions.

We’ll be glad to assist further if needed.

Is QB going to be updating their payroll program to track the Qualified Overtime Tacking for multiple overtime rates on one paycheck?  When you are working on prevailing wage project one employee can have multiple rates of pay and multiple rates of overtime. Has anyone contacted QB concerning these scenarios? 

I spoke with Intuit the day before yesterday. Unfortunately, right now, it seems we will have to manually figure the qualified OT, using the QB generated Qualified OT Tracking payroll item.  Make sure to run Payroll Update to make sure you have the latest.

What I have done, is, I added the Qualified OT Tracking to each employee under the Company Contributions sections.

When I ran Payroll, before completing payroll, when you get to the screen showing all the Payroll information, ie Pay Period Ends, Check Date and each employee with their hours, click on "Open Paycheck Details" ( I'm guessing you already do this because you're having to input the fringes in Payroll Details.)

At this point, open each employee individually. Make sure they are all "checked"

• Under Other Payroll Item, add Qualified OT Tracking.
• In the rate column, input the OT rate and using QB as a calculator, divide by 3 - there are 3 halves in time & a half.  for example:  Ot rate of $48.00/3 - $16.00 is qualified OT rate.  
• In the Quantity Column input the number of hours.  You'll see it track under Company Summary

(If you have multiple rates of OT, you'll have to add that Qualified OT Tracking for each rate.)

FYI - I had to add new payroll items for the calculation to start, even we use the standard set up.  I only did my Cost of Goods Sold: Labor so far. 

The calculations are not correct, as you can in many of the messages.  Plus, it add the hours with the amount even when there is no overtime.  Are these going to be corrected in the next update? 

FYI - I had to add new payroll items for the calculation to start, even we use the standard set up.  I only did my Cost of Goods Sold: Labor so far. 

The calculations are not correct, as you can in many of the messages.  Plus, it add the hours with the amount even when there is no overtime.  Are these going to be corrected in the next update? 

Hi, Jill.

Thank you for joining this discussion. Let me share some details to help clarify payroll calculations.

To begin with, you mentioned that you had to add new payroll items for the calculations to start. Does this mean that you have manually added the tracking item for Tracking Qualified Overtime? If so, please note that QuickBooks Desktop Payroll is unable to calculate the qualified amount automatically. Instead, you’ll need to manually determine the correct amount following FLSA guidelines and enter it for each paycheck.

Also, make sure your tax table is up to date. If the issue persists despite updating, we can try troubleshooting by checking the possible causes, which may include:

• Payroll item or employee setup issues
• Wage limits reached
• Incorrect tax or SUI rates

If the setup appears correct and the issue persists, I recommend contacting our QuickBooks Payroll Support team for further assistance. They have specialized tools to investigate and can provide prompt solutions.

Please feel free to revisit this thread for further clarification. We’re here to ensure you can get back to managing your QuickBooks account.

I'm having problems with QB using the "holiday overtime" to calculate the qualified tracking.  It is also only doing it on 1 out of 3 employees this pay period.  When I logged in to do payroll, it made me set up the Qualified Overtime Tracking.  It gave me a Yes or No option.  I chose "yes", as it said it would automatically calculate and post everything.  Then it did the using holiday OT and only one person.  I need to post and pay employees today, but unsure of the issues it will have for employees or our company in system.

Hello there, @Cyndie71. Thank you for reporting the incorrect calculation of the Qualified overtime for your employee.

To begin with, I recommend checking the setup of the Qualified payroll items for your affected employee. Make sure it’s the same setup for the other two employees. If not, you’ll need to manually correct the setup and then create a payroll to verify that the calculation is now accurate.

Here’s how to check payroll item setup:

1. Go to the Lists menu and select Payroll Item List.
2. Right-click the item and select Edit Payroll Item.
3. Review the info on each window.
4. Select Finish.

If the issue persists, you can contact our Live Support team to further check why the calculation of Qualified overtime is inaccurate.

If you have any other concerns, please click Reply.

Thank you!  Although not a convenient fix, this works.  

You’re very welcome, lm603.

I am glad to hear that my colleague's guidance helped you correctly calculate the Qualified Overtime for your employee in QuickBooks Desktop. Maintaining accurate records and ensuring your payroll remains compliant is our top priority.

Please feel free to return to the Community at any time if you need further assistance with your payroll or any other features. Wishing you a wonderful and productive day!

I didn't think you qualified for OT when you take a paid holiday.

I found this:  Under federal law, you generally do NOT qualify for overtime (OT) pay solely because you took a paid holiday during the workweek. Overtime is calculated based on hours actually worked, and paid, non-worked hours like holidays, vacation, or sick time do not count toward the 40-hour threshold.

Please advise.

My company also works on prevailing wage projects, and Maryland law requires that only the base rate of the prevailing wage be paid at time and a half for overtime. As a result, I currently have to manually calculate each employee’s overtime, which is very time-consuming. We need the ability to split a single earnings item into two separate components.

You are correct,  MN Rookie. Thank you for this information.

Under the Fair Labor Standards Act (FLSA), employers are not required to offer premium pay for working on holidays, weekends, or days of rest. Overtime is calculated solely on hours actually worked during a workweek. Non-worked hours, like holidays, vacation, or sick pay, do not count toward the 40-hour threshold for overtime eligibility.

Let us know if you have any other questions. We'll be glad to assist you further.

Our Company does weekly payroll, I was able to use the Qualified OT Tracking for payroll this week.  Unfortunately, I did not use it for the first weeks of this year.  How should I adjust those other paychecks.  Since there is no actual change in the amount paid, could I just adjust the paychecks?

Denise

Denise,

You can go into each employee's check and make the correction.

1. Go to the EMPLOYEES tab on the home screen
2.  Select an employee in the left column
3.  Highlight by clicking on the paycheck you need to change
4.  Click on Paycheck Detail...
5.  At the bottom right of the window click on Unlock Net Pay and say OK to the window that pops up
6.  In the Other Payroll Items section type Qualified OT Tracking (it should populate once you start typing)
7. Tab over to the Rate Column.  You can use QB as a calculator and input the Full OT rate and divide by 3 to get the Qualified OT amount.
8. Tab over to the Quantity column and input the number of hours.
9. It should change show the amount and year to date amount under Company Summary.
10. You have to do that for each OT rate that is a different amount.  For instance we do prevailing work, so each job has a different rate, a different rate for out of town work, etc.  Each one of those rates has to be manually done like the instructions above, for each employee.
11. Click OK when you're finished and it will be reflected on that paycheck.  You have to do that for each employee and for each check which needs to have QOT.

I hope that helps

Hello there, @denise808. Yes, you can edit those paychecks.

If it’s regular paychecks, you can simply open the paycheck details and add the Qualified Overtime Tracking. Here’s how:

1. Go to the Employee and select Employee Center.
2. Select the employee whose paycheck you need to edit.
3. Double-click the paycheck and click Paycheck Detail.
4. Under the Other Payroll Items section, apply the Qualified Overtime Tracking and enter the rate.

However, if the paycheck was processed via direct deposit and it is locked, you can apply the Qualified Overtime Tracking in the next paycheck instead, since this won’t affect the net pay.

We're always here to help you if you have any other concerns.