For Tax Year 2025, the IRS will be flexible on the calculation and the reporting of the qualified overtime. Employers are asked (but not required) to provide their employees with a reasonable approximation of their annual qualified overtime premiums (the 0.5 portion of the overtime pay).
Employers and other payors are required to file information returns with the IRS, or SSA in the case of Form W-2 and provide statements to taxpayers showing the total amount of qualified overtime compensation paid during the year (additional IRS guidance is pending). Formal reporting will happen in the years 2026, 2027 and 2028.
For Tax Year 2025, the IRS will be flexible on the calculation and the reporting of the qualified tips. Businesses are asked (but not required) to provide their employees and independent contractors with a reasonable approximation of their annual qualified tips. This information can be provided to employees on the last paystub for the year, or on another document (additional IRS guidance is pending). Formal reporting will happen in the years 2026, 2027 and 2028.
For 2025, Payroll Service Solutions can provide an informational report based on the payroll data you have supplied; however, we are unable to determine whether all eligibility or qualification requirements have been met. This report is for informational purposes only and should not be relied upon for official tax reporting. Payroll Service Solutions makes no representation or warranty as to whether any amount shown qualifies for any particular tax treatment. Consult your tax advisor regarding the proper reporting and treatment of any amounts included.
This report is available by email request only for a one-time fee of $35. Email your business name and client number to consult@payrollservicesolutions.com. The report will be emailed to you within 10 business days after your end of year has been processed.
The Department of the Treasury and the Internal Revenue Service issued guidance providing penalty relief to employers and other payors for tax year 2025 regarding new information reporting requirements for cash tips and qualified overtime compensation. See Notice 2025-62 on irs.gov. Employers are responsible for determining what is “qualified Overtime”, “qualified tips, and separating qualified tips and occupation codes. Payroll Service Solutions cannot make this determination for you. Please visit the IRS website for details.