How to calculate code TT (qualified overtime)

For tax year 2026, Box 12 code TT reports total qualified overtime compensation. The IRS defines it as compensation paid to an individual required under section 7 of the Fair Labor Standards Act (FLSA) that is more than the regular rate.

Only the premium half

The IRS example: "only the 'half' portion of 'time-and-a-half' compensation would be reported using code TT." For an hourly worker, a working estimate is:

FLSA overtime hours × regular rate × 0.5

Common gaps to check

• Overtime paid only because of a state rule or company policy is not described by the FLSA section 7 definition; check with your advisor.
• Overtime is still generally subject to federal income tax withholding and social security and Medicare tax.
• Compare your computed TT total with what your payroll provider will print before forms go out (due to the SSA February 1, 2027).

Doing this for real payroll? The 2026 W-2 Tips & Overtime Kit (an educational kit, not tax advice) includes a year-end checklist, a payroll-to-TP/TT workbook and a guide to the IRS tipped-occupation codes, for one business ($149) or up to 25 client businesses ($399). See the kit

Related: Box 12 codes TP and TT · Box 14b occupation codes

Sources

• IRS: 2026 General Instructions for Forms W-2 and W-3
• DOL: Overtime pay

Educational kit, not tax advice. This page summarizes the IRS 2026 General Instructions for Forms W-2 and W-3 as read on October 30, 2026. It is not tax, legal or payroll advice; confirm with your CPA, enrolled agent or payroll provider and check current IRS instructions before you file. Swift Labs is not affiliated with the IRS.