Surgent's Taxation of Tips and Overtime Under OBBBA

Overview

Arguably the most discussed topics to come out of the  One Big Beautiful Bill Act (OBBBA) are the taxation of tips and overtime. Practitioners need to understand these provisions now, as they are effective for 2025 tax returns. This program provides practitioners with the background currently available to advise clients regarding these two important tax developments. Both employers and employees need to understand these timely changes to taxation.

Prerequisites

None

Objectives

• Expertly advise clients regarding the latest on taxation of tips and overtime emanating from OBBBA

Highlights

• $12,500 deduction per individual for qualified overtime pay
• Payment of overtime under the Fair Labor Standards Act (FLSA)
• Calculating the "premium portion" of the extra half-time pay
• Social Security and Medicare withholding
• Employer furnishing the record of qualified overtime compensation to employees
• Definition of a qualified tip
• IRS list of traditionally-tipped occupations
• $25,000 deduction for reported tips
• The transition rule allowing employers to indicate the approximate amount designated as tips or overtime
• State tax issues relating to tips and overtime
• Changes in the W-2 reflecting new employer reporting responsibilities