Guidance issued in January on this year’s new overtime tax break has since been retired by the Internal Revenue Service itself, and the fine print of that swap matters more than a routine update usually would. On August 6, 2026, the IRS published Fact Sheet 2026-13, stating outright that it supersedes Fact Sheet 2026-01, the question-and-answer set the agency issued on January 23 to explain the deduction for qualified overtime compensation created by the One, Big, Beautiful Bill Act. The gap between the two documents is not a matter of tone or formatting — the August version closes a reporting gap the January version left open, with real consequences for anyone who filed a return, ran payroll, or advised a client based on the earlier answer.
Two Fact Sheets, Five Months Apart
Fact Sheet 2026-01 was written for a narrow window. The new deduction applied starting with the 2025 tax year, but employers were not yet required to separately report qualified overtime on Form W-2, so the January FAQs leaned on transition relief to bridge that gap for one filing season only.
By August, that transition period was over. Fact Sheet 2026-13 says it adds an index, renumbers the questions, and deletes everything that applied solely to the 2025 tax year — then replaces that material with roughly twenty new or substantially rewritten questions covering Fair Labor Standards Act eligibility, Form W-2 and Form 1099 reporting, federal withholding, and rules specific to federal employees. The IRS announced the change in news release IR-2026-88, describing the FAQs as incorporated into the release by reference — the language the agency uses when it wants guidance treated as the current, reliance-eligible version, not an archived one.
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The 2025 Safety Valve That Expired
The most consequential change is not in the new questions but in what got taken away. Under Notice 2025-69, the relief that shaped the January FAQs, a worker could still claim the overtime deduction for 2025 using personal pay records even if the employer’s Form W-2 never separately listed the amount. That option is gone. Fact Sheet 2026-13’s Q&A 20 states plainly that for tax years after 2025, an employee may not consider any qualified overtime compensation beyond what the employer actually reports on Form W-2, box 12, code TT, or the corresponding box on Form 1099-NEC or Form 1099-MISC. Anyone who read the January guidance, noticed the 2025 workaround, and assumed the same flexibility would carry into a 2026 return is now relying on a rule the IRS no longer applies.
Box 12, Code TT Becomes Mandatory — and Hard to Fix After the Fact
The January FAQs never addressed what happens when that W-2 entry is wrong, because for 2025 there was no mandatory entry to get wrong in the first place. Starting with tax year 2026, employers and payors must separately report qualified overtime compensation — on Form W-2 in most cases, or on Form 1099-NEC or Form 1099-MISC when a worker is treated as an independent contractor for tax purposes but as an employee under the FLSA.
The new fact sheet spells out what happens when that number is off. If an employer overstates the box, the worker may only claim the amount actually paid, not the inflated figure. If an employer understates or omits it, the worker’s only recognized fix is requesting a Form W-2c, Corrected Wage and Tax Statement. A substitute wage statement, Form 4852, does not work for this particular deduction — the fact sheet says directly that Form 4852 is not furnished under the tax code section that qualifies a statement for the deduction, so nothing reported on it can be used to claim it. If the employer will not or cannot issue a correction, the deduction is capped at whatever the flawed W-2 already says.
Withholding Still Runs on Autopilot
A new section of the fact sheet — Topic D, which did not exist in January — closes another gap: employers are not required to shrink paycheck withholding just because a worker will eventually claim the deduction. Overtime pay, including the qualified portion, remains fully subject to federal income tax withholding unless the employee files an updated 2026 Form W-4 that accounts for the expected deduction in Step 4(b), or works through the IRS’s updated Tax Withholding Estimator to size the adjustment. Anyone who assumed a smaller paycheck automatically meant the deduction was already baked in was following guidance that, as of January, had not addressed withholding at all.
The fact sheet itself acknowledges its answers are not permanent. It notes that reliance on IRS FAQs protects a taxpayer only for the version in effect when they filed, which is why the agency says it will keep the January fact sheet archived on IRS.gov rather than deleting it — so anyone who followed the old rules can still point to exactly which version they used.
How a Corrected Wage Statement Echoes Into a Refund
A Form W-2c that fixes a qualified overtime entry does not just change one line on a tax return; it can shift the withholding total the IRS already has on file and create a mismatch between what was reported and what was expected. That kind of mismatch is a common reason a refund tied to that return gets pulled for review instead of processing on schedule. Sorting out which notice applies, and what to do if a refund goes quiet afterward, is a separate task from understanding the deduction itself.
The IRS Refund Recovery Kit walks through a notice decoder for making sense of an IRS letter and the refund-trace steps built around Form 3911 for following up when an expected refund has not shown up.
Compare a letter already received against the notice decoder in The IRS Refund Recovery Kit.
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