Question

New 2026 Qualified Overtime

Forum|Forum|6 months ago
January 1, 2026
4 replies
349 views

I use QuickBooks Enterprise Desktop - I know QuickBooks created a Qualified OT Payroll Item in Company Contributions which only works with the QuickBooks created Overtime Payroll Item.

However, I create my own payroll items as we do prevailing wage work (all different pay amounts), work out of town (different municipalities have different taxes so I need to track that job) and track different labor types for Workman Compensation purposes - I think I can take care of this through the worker comp codes.

Is there anyone else out there with this problem?

I have a feeling I'll need to create my own payroll item for each of those different circumstances, and manually input the qualified ot amounts and then manually track these to the $12,500 limit.

Any suggestions?

QuickBooks Desktop Payroll

K

KayePe

QuickBooks Team

You're on the right track, @Shari15.

Managing multiple pay rates, out-of-town work with varying taxes, and diverse labor types requires manually adding payroll items to your employees.

Start by selecting the correct tax tracking type when creating the company contribution payroll item. Once the amount is calculated, enter it and add the tracking item to your employees.

Here's how:

Go to Employees and click on Employee Center.
Find the employee’s name and double-click on it.
Go to Payroll Info.
In the section for Additions, Deductions, and Company Contributions, add the contribution item.
Enter the amount for each period and the maximum limit.
Click OK to save.

For additional information on the process, read the section titled "If you use pay types other than our embedded overtime items" in this article: Impact of the No Tax on Overtime provision to QuickBooks Payroll.

You can also reach out to your accountant for further help. They can assist you in tracking the limit amount effectively.

Please let us know if you have more questions. We're here to guide.

S

spencerpaving

Is QB going to be updating their payroll program to track the Qualified Overtime Tacking for multiple overtime rates on one paycheck? When you are working on prevailing wage project one employee can have multiple rates of pay and multiple rates of overtime. Has anyone contacted QB concerning these scenarios?

S

Shari15Author

I spoke with Intuit the day before yesterday. Unfortunately, right now, it seems we will have to manually figure the qualified OT, using the QB generated Qualified OT Tracking payroll item. Make sure to run Payroll Update to make sure you have the latest.

What I have done, is, I added the Qualified OT Tracking to each employee under the Company Contributions sections.

When I ran Payroll, before completing payroll, when you get to the screen showing all the Payroll information, ie Pay Period Ends, Check Date and each employee with their hours, click on "Open Paycheck Details" ( I'm guessing you already do this because you're having to input the fringes in Payroll Details.)

At this point, open each employee individually. Make sure they are all "checked"

Under Other Payroll Item, add Qualified OT Tracking.
In the rate column, input the OT rate and using QB as a calculator, divide by 3 - there are 3 halves in time & a half. for example: Ot rate of $48.00/3 - $16.00 is qualified OT rate.
In the Quantity Column input the number of hours. You'll see it track under Company Summary

(If you have multiple rates of OT, you'll have to add that Qualified OT Tracking for each rate.)

K

KayePe

QuickBooks Team

Hello there, @Shari15.

I just wanted to follow up to check if the resolution we provided helped resolve your issue. Please let us know if everything is now working as expected or if you still have any questions.

We’ll be glad to assist further if needed.

C

cadydipaola

My company also works on prevailing wage projects, and Maryland law requires that only the base rate of the prevailing wage be paid at time and a half for overtime. As a result, I currently have to manually calculate each employee’s overtime, which is very time-consuming. We need the ability to split a single earnings item into two separate components.

B

BabyB

QuickBooks Team

I appreciate you joining this thread.

You are correct, MN Rookie. Thank you for this information. Under the Fair Labor Standards Act (FLSA), employers are not required to offer premium pay for working on holidays, weekends, or days of rest. Overtime is calculated solely on hours actually worked during a workweek. Non-worked hours, like holidays, vacations, or sick leave, do not count toward the 40-hour threshold for overtime eligibility.

Regarding your concern, Cady, while QuickBooks Desktop offers customizable payroll setups, it does not currently include a feature that split an employee’s earnings into two components as described. For now, a workaround would be to continue using a separate payroll item for overtime and calculate the amounts manually.

Let us know if you have any further questions. We'll be glad to assist you.

D

denise808

Our Company does weekly payroll, I was able to use the Qualified OT Tracking for payroll this week. Unfortunately, I did not use it for the first weeks of this year. How should I adjust those other paychecks. Since there is no actual change in the amount paid, could I just adjust the paychecks?

Denise

S

skcpa124

In payroll report it shows qualified over time amount in employer portion does employer has to pay that as other taxes

B

BabyB

QuickBooks Team

Hi, skcpa124. The Qualified Overtime Tracking item is used to track the premium portion of overtime for reporting on the employee’s W-2 at year-end. Employers don’t pay this as additional tax.

It is shown in the employer portion because QuickBooks sets this up as a Company contribution item. This ensures W-2 data is tracked without additional money in the worker’s paycheck or deductions from yours.

Please don't hesitate to reply below if you have additional concerns.

J

Junk1000

This is very confusing for our office manager. When she goes to pay liabilities the Qual OT tracking amount shows up as a liability to pay. Why is this? I am certain this is not to be paid to the IRS as it is only a W2 tracking item. I'm sure this is confusing many people and many people will automatically pay this to the IRS. When will this be fixed?

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