Need new overtime report to give employees to support new tax bill

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I appreciate you, and thanks for this gem! Have a good one! 

The employee's pay stub shows their YTD overtime, so the last pay stub will show their overtime for the year.

It doesn't seem like anything else is needed?

That would be way too easy.  The tax-free amount is the "and a half."  Example for one pay check:

Regular wage = $10/hr, OT wage = $15/hr.  You work 40 reg hours and 10 OT hours.

Your gross wages are ($10*40 hours) + ($15*10 hours) = $400 + $150 = $550.

The taxable wage is ($10*50 hours) = $500

The tax-free wage is ($15 OT rate - $10 reg rate) * 10 OT hours = $5*10 hours = $50.

The 2025 W2 will not be changing, showing only Gross wages, etc.  The 2026 W2 will be different.  No existing QB PR report will show this.  I believe as accountants we need to help our clients support their employees and tell them what the tax-free number is.  Naturally I realize there is NO feedback to the IRS on the actual amount, so the employees can put in whatever they like.  There is a new 1040 form Schedule 1-A to handle these new situations, including the tips.  I had planned on throwing this all into Excel and churning out a letter for each employee saying something like "You worked 400 hours of OT in 2025, resulting in $6000 of overtime wages. According to the new tax rules, $2000 of this is tax-free.  Please contact your tax professional on how to use this information to comply with the new laws." I'd put it in with the W2.

The problem is we all need to do that.  I would like QB PR to create a report and letter for us.

Using your example, the employee's last pay stub for the year will have a line item on it for Overtime and the YTD column will show $6,000. True, it won't tell the employee to divide by 3 to get $2,000, but that seems like a small step.

Even so, you can create a report in QuickBooks with the total overtime per employee and then send it to excel as you suggest.

To do this, start with the Employee Earnings Summary report.  Then filter it for the payroll item or items that are overtime, and you'll get a report like this:

Then send it to Excel and add a column that calculates the Qualified Overtime with a formula:

I can't believe I'm conversing with the revered Big Red!  

Thanks for your knowledge of how to work the Earnings report to feed Excel.

I have a larger issue though.  I went to the IRS forum, and they kept reciting "we have not received guidance on that yet."  However, the cavalier statement out there is "No tax on overtime."  I believe QuickBooks, Paychex, and ADP must step up and create relevant reports for their PR clients. Most accountants believe as you did earlier, "Just give them the year-end pay stub."    That YTD stub does not show OT hours, only totals and not how to make it useful.  So you're right, we have to provide guidance.  Plus for singles the max is $12,500 which several of my guys would hit.  

So I will take your suggestions and prepare something for the employees.  Thank you for your guidance. Then if something doesn't show up from the Big Three before January, I'll be ready before crazy time starts.  

One big problem.  Tax preparers are not allowed to use pay stubs to get the overtime.  Per the law, the overtime must be show on either the W-2 or an attached statement from the employer.

Do think we could use Box 14?  

There are also rules about salaried employees reporting the overtime; some quality, some do not.  As the accountant, I don't want to get into the weeds between firefighters and software engineers about who qualifies.  

The rules state the employee must take the number provided by the employer.  When I submit W-2s in QB PR, there is not an attachement feature I am aware of to provide the supporting statement.  Maybe the taxpayer can attach the supporting document to their own tax return.  

I'm hoping there won't be some taxpayer revolt early April when this hasn't been settled and they try to file.