W-2 code TT: Exempt employees and owners
Short answer: No. Overtime paid to an FLSA-exempt employee is never qualified overtime, even if a contract or state law requires it, so their code TT is zero. Owners with 20% or more who manage the business count as exempt.
Example
A salaried exempt manager paid $50 an hour for extra weekend hours under company policy has $0 code TT. An hourly worker who became exempt in July has code TT only for the overtime-eligible weeks before.
A salaried exempt manager paid $50 an hour for extra weekend hours under company policy has $0 code TT. An hourly worker who became exempt in July has code TT only for the overtime-eligible weeks before.
The rules
- Only FLSA overtime-eligible employees can receive qualified overtime (FS-2026-13 Q4).
- 20% owners active in management are exempt executives (FS-2026-13 Q5).
- FLSA employees paid on Form 1099 get the amount in 1099-NEC box 1d or 1099-MISC box 14 (FS-2026-13 Q6, Q7).
Work it out for your payroll
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
The free code TT calculator does this per workweek for one employee or a whole payroll CSV, with bonuses spread back and weeks split by pay date. It runs in your browser.
Whole payroll, offline? The W-2 Code TT Kit runs every employee in one file with no network access, plus CSV templates, the week-by-week audit trail and a 12-page guide to every rule.
Get the kit ($29, accountants $99)
Get the kit ($29, accountants $99)
Sources
Not tax or legal advice. Facts checked 27 Oct 2026 against the IRS FAQs (FS-2026-13) and the FLSA regulations.
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