Reporting Qualified Overtime Wages for the 2025 Tax Year

Method A: Automatic Calculation by Pay Code for FLSA Overtime

1. Navigate to Payroll > Tax Reporting > Employee Tax Reporting.
2. Click Setup Pay Codes.
   
3. From the dropdown, select an overtime pay code that complies with FLSA overtime.
4. Choose 14 from the W-2 Box # dropdown.
5. Click the green checkmark next to the W-2 Description dropdown.
   
6. Add the following:

   • Code: OTTAX

     NOTE: The code printed on the W-2 is limited to 5 characters. We recommend using OTTAX, but you may choose any code that meets this requirement.
   • Value: QUALIFIED OVERTIME
7. Click Close Form.
8. Select OTTAX from the dropdown and repeat for all applicable overtime pay codes.
9. Verify Setup Pay Codes and Setup W-2 Boxes for Boxes 12–14 before building tax data.
10. After building tax data, confirm eligible overtime by selecting 14. Pay Codes. The popup will display all Box 14 details for the printed W-2s.
    

Method B: Manual Entry for Complex Overtime Policies

Prerequisite: Ensure Pay Code Setup and Employee Payroll Data are correctly configured. Refer to FLSA Eligible OT Wages Hours Report Details and Setup.

1. Run the FLSA Eligible OT Hours Wages (Excel) report:
   • Navigate to Payroll > Custom Legacy Payroll Menu > Custom Payroll Menu
   • Select Payroll – User Reports Standard > FN PR Reports Page 2 > FPR15.
   • Select 14 FLSA Eligible OT Hours Wages (Excel).
   • Enter the first day of the payroll year and choose a folder to save the report.

2. Open the report and review for NULL values.

   NOTE: If the Pay Rate is NULL, this indicates that the employee was FLSA eligible for overtime but did not have any overtime pay codes during that week.
   • If Pay Rate is NULL, verify employee overtime eligibility and pay code setup.
   • Correct any pay rates and calculate eligible wages:
     Eligible Hours × Pay Rate × 0.5.
3. Add subtotals for each employee to determine total eligible FLSA overtime wages.
4. Navigate to Payroll > Payroll Maintenance > Payroll Setup > Misc Codes (PR) 

5. Choose W2BoxNo14 from drop-down

   

6. Add the following Code and Value: 

   • Code: OTTAX

     NOTE: The code printed on the W-2 is limited to 5 characters. We recommend using OTTAX, but you may choose any code that meets this requirement.
   • Value: QUALIFIED OVERTIME
7. Close Form and Navigate to Payroll > Tax Reporting > Employee Tax Reporting. 
8. Complete the tax build after verifying W-2 Box setup for Boxes 12–14 are completed in Setup W2 Boxes.
9. Edit W-2 Box 14 for each employee:
10. Click Modify Employee. Employees are sorted by Employee Number.
11. For each employee listed on the FLSA Eligible OT Wages Hours report repeat the following steps:
    • Click 14. Pay Codes to open the popup window.
    • From the W-2 Desc dropdown, select OTTAX.
    • In the Amount field, enter the Total Eligible FLSA Overtime Wages from the report.

Report Setup Details