S100C v 27.3, OBBBA, and OT Wages – What a Mess!

This has been a hot topic for months! In the CPA world, questions swirl around a variety of issues. Turns out some states have overtime laws that are different from the FLSA rules, so which one wins? Some employers include PTO in their 40-hour threshold or pay overtime for working holidays or weekends. Some employees may not qualify for the deduction.

Taking this deduction can impact a person’s Adjusted Gross Income (AGI) which may impact other means-tested benefits. The software doesn’t calculate the ‘half’ of the time-and-a-half for the current year, and it is unclear which rules to apply anyway.

Well, ready or not, S100C version 27.3 has been released and Sage says they’re ready, so here are a few things to know.

The calculation of the federal overtime deduction follows the rule of overtime after 40 hours of work, so the amount reported may be less than the employee is expecting.

Version 27.3 will calculate the qualified premium-only portion based on the federally mandated rules.

For 2025, the amount of federal overtime will be reported on the W-2s in Box 14 with the code OBBBTT. Looks like in the future, it may be moved.

Now the fun part—we need a report that calculates the overtime portion only of the time-and-a-half. In this update, you’ll start in the 5-2-2 screen with Administrator rights AND Exclusive Access! Looks like we’ll see two new fields (just like we did when the ACA came out), one for Federal Overtime Hours, and one for Federal Qualified Overtime Comp. These fields will be updated from the timecard information for checks dated 2025 through 2028, payroll type 1-Regular, weekly or bi-weekly checks, where the Salary field is blank.

The Release Notes say you’ll be able to override these calculated amounts, and piece pay on overtime will be excluded.

As expected, calculating this amount does NOT change the Federal Wages for reporting purposes. This deduction is part of a person’s personal tax return and the possibility of a lower Federal Withholding amount due includes other factors that we as employers cannot determine. So if someone makes a lot of overtime and thinks they’ll qualify for the deduction and wants to lower their withholding, they can submit an updated W-4 but that’s the only option.

As I write this, all the info just came out so we’ve not been able to test yet. Keep an eye on our regular email updates and we’ll share news as we learn it! –CMW