W-2 code TT: Nondiscretionary bonuses
Short answer: A promised bonus (production, attendance, retention) is part of the regular rate. Spread it over the weeks it was earned in; each overtime week then owes half of its share ÷ its hours for each overtime hour. That extra premium is code TT in the year the bonus is paid.
Example
A $260 quarterly bonus covers 13 weeks: $20 a week. In the week with 50 hours the extra premium is 0.5 × ($20 ÷ 50) × 10 = $2. Paid with the bonus in April, it goes on that year's W-2.
A $260 quarterly bonus covers 13 weeks: $20 a week. In the week with 50 hours the extra premium is 0.5 × ($20 ÷ 50) × 10 = $2. Paid with the bonus in April, it goes on that year's W-2.
The rules
- Nondiscretionary bonuses are in the regular rate; discretionary bonuses and gifts are not (29 CFR 778.211, 778.212).
- A bonus that can't be tied to particular weeks is spread equally per week, or equally per hour worked (29 CFR 778.209).
- Overtime counts in the year it is paid (FS-2026-13 Q3), so a 2026 bonus paid in January 2027 belongs on the 2027 W-2.
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.
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Get the kit ($29, accountants $99)
Sources
- IRS FS-2026-13: Qualified overtime compensation FAQs (August 2026)
- eCFR: 29 CFR 778.209
- eCFR: 29 CFR 778.211
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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Other situations
- Double time
- State daily overtime (California and others)
- Tipped employees
- Salaried non-exempt employees
- Fluctuating workweek
- Piece-rate and day-rate pay
- Hospitals (8/80) and police or fire (7(k))
- Public-sector comp time
- Exempt employees and owners
- Weeks paid in the next year
- Fixing a wrong code TT amount (W-2c)