If an employer did not report qualified overtime on my 2025 W‑2, what documentation satisfies the IRS for claiming the deduction?

1. What the IRS said about 2025 reporting and why documentation matters

Congress created a new deduction for qualified overtime effective for tax year 2025, but the IRS left 2025 as a transition year because current information returns (W‑2s and many 1099s) were not updated; as a result Treasury and the IRS provided penalty relief for employers who do not separately report qualified overtime for 2025 and told employees how to calculate deductions when employers don’t supply a separate accounting ^{[1] [4] [5]}.

2. Core categories of documentation the IRS accepts as sufficient

For 2025 the IRS guidance and related practitioner summaries describe “reasonable” documentation that taxpayers may use: internal payroll records (pay stubs, payroll registers, timecards), employer accountings or statements made available through portals or paper memos, and any notation employers put in Box 14 of the W‑2 or on an attached statement — all of which can be used to determine the qualified overtime amount when a separate W‑2 line is absent ^{[1] [6] [7]}.

3. How taxpayers must calculate the deductible “overtime premium” and document the math

Notice 2025‑69 and IRS examples explain methods to compute the deductible portion of overtime (the excess pay over regular rate that generally equals the “half” of time‑and‑a‑half or the premium computed by the Notice’s formulas), and emphasize that taxpayers must keep copies of the records and the calculations they relied on when claiming the deduction ^{[3] [2]}. Practitioner guides give concrete illustrations and show taxpayers may be asked to divide total overtime compensation by specified factors to isolate the premium — so save the arithmetic, worksheets, and source pay figures ^{[8] [3]}.

4. Specific documents to collect and keep with the return

Acceptable supporting material cited across IRS notices and industry write‑ups includes pay stubs that show overtime earnings, the employer’s payroll register or year‑end earnings export, timecards or punch records evidencing hours worked, any written statement from the employer (including Box 14 or an attached statement on the W‑2), online portal snapshots or employer communications, and — where relevant for tips — Form 4137 line 4 for unreported tips ^{[7] [9] [1] [10]}. The IRS explicitly told taxpayers to maintain whatever documents they rely on in accordance with other IRS recordkeeping rules ^[2].

5. What to do if the employer refuses or can’t produce records

If an employer does not furnish an accounting, the guidance allows taxpayers to use reasonable methods to estimate qualified overtime based on available payroll data, contemporaneous time records, and standard payroll practices; the taxpayer must retain those estimates and underlying evidence in case of IRS inquiry ^{[3] [5]}. The transition relief also meant employers faced no penalties for failing to provide separate reporting in 2025, so taxpayers should be prepared to substantiate their claims without expecting uniform employer cooperation ^[1].

6. Caveats, limits, and next steps to reduce risk

The 2025 relief is temporary and forms are scheduled to be redesigned for 2026, so the IRS will expect clearer reporting in future years and could scrutinize 2025 claims where documentation is thin ^{[4] [6]}. Taxpayers whose situations are complex — e.g., collective‑bargaining overtime, unusual pay arrangements, or independent contractors — should consult the Notice and, if needed, a tax professional because the guidance includes occupation‑eligibility rules and exceptions the taxpayer must evaluate ^{[3] [11]}.