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W-2 Doesn't Show Tips or Overtime Separately: What to Do

Short answer: For tax year 2025, IRS Notice 2025-69 gave transition relief: employers were not required to show qualified tips and overtime separately, and you could use other records and "reasonable methods" to work out the amounts. For 2026, the W-2 is expected to carry box 12 codes TT and TP; see what the codes mean.

Tips (tax year 2025)

Notice 2025-69 lists ways to determine qualified tips for 2025 when the employer did not separately report them. One option is to use the total social security tips in W-2 box 7. Other options: the total tips you reported to your employer on Forms 4070 (or a substitute), an amount your employer chose to report in box 14 or on a separate statement, or the amount on line 4 of a 2025 Form 4137 you file with your return. The Notice says that if boxes 3 and 7 combined equal $176,100, box 7 may not include all cash tips, and you should review your Forms 4070.

Schedule 1-A (2025) line 4a refers to W-2 box 7, with instructions if box 5 is more than $176,100.

Overtime (tax year 2025)

The Notice says an FLSA-eligible employee may treat the "separate accounting" requirement as satisfied if the overtime is reported on a W-2 or 1099-NEC/1099-MISC, and may base the amount on pay statements, invoices or similar documents using a reasonable method. Methods described include (made-up dollar examples, our own arithmetic):

• Statement shows the "half" premium separately (paid time-and-a-half over 40 hours in a workweek): use that amount. If it shows $3,000, use $3,000.
• Statement shows overtime pay but not the premium separately (paid time-and-a-half): use one-third of the aggregate amount. If the entry is $9,000, one-third is $3,000.
• Paid double time: the Notice describes applying a fraction (one-half of the separately stated excess, or one-fourth of the aggregate).
• No statement: use a reasonable method based on your regular rate under 29 USC 207(e) (or a reasonable approximation) and hours over 40 in a workweek. A reasonable method includes requesting information from your employer and using it.

Other special rules in the Notice cover non-FLSA-section-7(a) situations such as certain public-sector employees; read the Notice for those.

What to do, practically

1. Gather every pay stub and year-end statement.
2. Ask payroll in writing whether they can give a statement of the overtime premium (FLSA "half" amount) and cash tips for the year.
3. Keep your calculation and records: IRS rules require records that support what you claim.
4. Compare your result with Schedule 1-A lines 4 and 14.
5. If you already filed without the deduction, see amending a 2025 return.

2026 and later

The Notice is for tax year 2025. We did not find equivalent transition relief for 2026 in the sources read; the 2026 W-2 instructions say employers must furnish statements showing qualified overtime and cash tips. Check IRS.gov for later guidance.

FAQ

Can I just use all my overtime pay? No: only the premium portion above the regular rate required by FLSA section 7 counts. I'm salaried and exempt from FLSA overtime. Our sources describe qualified overtime as required by FLSA section 7; whether any pay qualifies in your case is a question for a tax professional. My employer reports tips in box 14. Notice 2025-69 allows using an amount an employer voluntarily reports there for 2025.

What we could not verify

• Every method in the Notice (we summarised A to D and F; E and G are not detailed here).
• 2026 transition relief.
• State overtime rules that are more generous than FLSA.

Sources (IRS)

• IRS, Notice 2025-69 (transition relief for tax year 2025) — https://www.irs.gov/pub/irs-drop/n-25-69.pdf (read October 17, 2026)
• IRS, Schedule 1-A (Form 1040), Additional Deductions, 2025 (created 11/4/25) — https://www.irs.gov/pub/irs-prior/f1040s1a--2025.pdf (read October 17, 2026)
• IRS, General Instructions for Forms W-2 and W-3 (2026) (Jan 29, 2026) — https://www.irs.gov/pub/irs-pdf/iw2w3.pdf (read October 17, 2026)
• IRS, One Big Beautiful Bill Act: Tax deductions for working Americans and seniors, FS-2025-03 (July 14, 2025; updated July 25) — https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors (read October 17, 2026)

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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. See the disclosure.