Resolution:
OBBB Overtime Premium Correction - Step-by-Step Guide
What Happened?The IRS updated guidance on qualified overtime premium for double-time wages. The qualified premium is now only the half portion that exceeds regular pay under FLSA requirements, not the full premium for double-time pay. The OBBB Overtime Premium Exempt report has been updated to reflect this change.
Good News:
There is no penalty for misreporting premium wages for 2025 as it's a transition year.
Step 1: Update Your System- On-Premise Users: Update to version 25.3.3 when available
- Cloud Users: Wait for automatic system update
Step 2: Check If This Affects Users- Run the Ledger Card report by Employee:
- Navigate to: Payroll System > Reports > Ledger Cards > by Employee
- Report settings:
- Dates: 1/1/2025 to 12/31/2025
- Detail or Summary: Summary
- Show SSN: No
Review the Double column:
- If all employees show 0.00 = No action needed, users are done!
- If any employee has an amount greater than 0 = Continue to Step 3
Step 3: Generate the Updated Report- Run the OBBB Overtime Premium Exempt report:
- Navigate to: Payroll System > Reports > Tax Reporting > OBBB Overtime Premium Exempt
- Report settings:
- Exclude weeks with no OT/DT: Yes
- Detail or Summary: Detail
- One Employee per page: Yes
Step 4: Take Action Based on Your Situation
Situation A: W-2s Not Yet Distributed (After updating to 25.3.3)- If users already printed W-2s:
- Option 1: Reprint the W-2s and distribute the corrected versions
- Option 2: Distribute the already-printed W-2s along with the OBBB Overtime Premium Exempt report for affected employees.
- Instruct them to use the Exempt Amount total from the report instead of the amount in Box 14
- If users haven't printed W-2s yet:
- Simply print and distribute the W-2s (they will have the correct amounts)
Situation B: W-2s Already Distributed to Employees (After updating to 25.3.3)- Provide affected employees with the updated OBBB Overtime Premium Exempt report and instructions:
- If employee already filed their tax return:
- They must file an amended return using the updated Exempt Amount total from the OBBB report
- They should keep the report for their tax records
- If employee hasn't filed yet:
- They should file using the updated Exempt Amount total from the OBBB report
- They should keep the report for their tax records
Situation C: Users Previously Provided Information via Report (Not Printed on W-2)- Provide affected employees with the updated OBBB Overtime Premium Exempt report:
- If employee already filed their tax return:
- They must file an amended return using the updated premium amount from the OBBB report
- If employee hasn't filed yet:
- They should file using the updated premium amount from the OBBB report
Situation D: Users Use ComputerEase Payroll Service or Year-End Print Service- Provide affected employees with the updated OBBB Overtime Premium Exempt report and instruct them to use the updated premium amount when filing. They should keep the report for their tax records.
Important Note- No impact on employer filings: The premium amount was not included in any employer filing for 2025
- Employees should always use the Exempt Amount total from the updated OBBB Overtime Premium Exempt report
- Keep all reports for tax records
- For detailed IRS guidance with examples, visit irs.gov