No, You Can’t Deduct All Your Overtime …

… But You Can Deduct This One Part

2025 brought a brand-new tax break that everyone is confused about: the overtime
deduction on Schedule 1-A. And honestly? The confusion makes sense. Payroll
systems updated overnight, Box 14 codes changed, and suddenly everyone thinks their
entire overtime check is deductible.

Let’s clear that up.

What the IRS allows

You can only deduct overtime premium.

This is the extra half-rate your employer pays when you cross over the 40-hour
threshold.

Example: If you made $4,000 in overtime last year, your pay stub might show the full
$4,000. However, your W-2, Box 14 might show something like $1,200.

That $1,200 is the overtime premium.

That’s the part you can deduct.

Why your pay stub doesn’t match your W-2

Your pay stub shows:

Only overtime hours
Total overtime pay (1.5 x rate)

Your W-2 Box 14 shows:

Only the premium portion (0.5 x rate)

They will never match. They are not supposed to.

Where to put it

Schedule 1-A, Part III, Line 14a

Type the Box 14 number exactly as printed.

Share the Post:

Small Biz Taxes and Your Dog

Think your dog is a tax write-off? For most pet owners, the IRS says no. This post covers the general rule on pet expenses, plus the legitimate exceptions: guard dogs used for business security, service animals with documented medical necessity, and working animals that are genuinely part of a business operation. If you have been wondering where the line is, this post draws it clearly.

Fine Dining for the Sell: The IRS Gets Their Just Desserts

Client dinners can build relationships and close deals, but how much can you actually deduct? This post breaks down the 50% rule for business meals, what documentation the IRS expects, and clears up the common misconception about 100% deductibility. Updated for 2026 with the new fishing and maritime crew meal exception under the One Big Beautiful Bill.