Volume 8 Issue 12 - December 2025
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Overtime Updates in USPS: What’s New and What’s Next
Overtime has certainly become a ‘hot topic’ of late. With that being said, below we’ve addressed how overtime will be reported in calendar year 2025, and then how overtime will be reported beyond calendar year 2025 into 2028.
Reporting Overtime in Calendar Year 2025
In early November, the IRS issued guidance for Employers related to Penalty Relief. In this memo, the IRS states that there are no changes to the W‑2 form for 2025, but Box 14 may be used to report qualified overtime. If there are additional questions regarding the reporting requirements, we recommend you check with your tax advisors. For calendar year 2025, the only means to report overtime on an employee’s W2 is by posting Core Adjustments. Districts will need to manually calculate the overtime amount and enter these adjustments individually under Core > Adjustments > Payroll Item 001 using the Type of W2 Overtime - or by creating a load file and uploading the file using Mass Load program. The W2 Overtime Adjustments amount will then be reflected on the W2 Report and on the W2 forms - in Box 14 with Code QOT. Keep in mind Box 14 has a print limit of three codes per employee (with leased vehicle and QOT always printing first).
To assist in calculating overtime amounts, we’ve created a customized version of the SSDT Account History v2.0 (located in the Public Shared Reports Library) that can be used. The report includes information such as the rate, pay type, and account object codes typically used for overtime charges. To begin using the report, simply download the report definition and then import the report definition using the Report Manager. This report can be generated by filtering on any of the above parameters to determine the overtime pay amounts and if applicable post adjustments for reporting the premium portion in Box 14 of the W2 form.
W2 Overtime Adjustments can also be loaded using a CSV file. A sample CSV load file template is available below.
Reporting Overtime Beginning January 1, 2026 through December 31, 2028:
Beginning January 1, 2026, the overtime rules for W2 Reporting will follow the same rules as FLSA. We’ve created a Reporting Overtime Under the One Big Beautiful Bill Act (OBBA) document - located in the Useful Procedures chapter of our USPS Manual - that contains details on how to process overtime beginning calendar year 2026, along with a commonly asked questions/answers section. Please refer to this page as you begin processing your payrolls in 2026.
USAS 1099 Precheck
As you prepare for Calendar Year End in USAS, now is a great time to review vendor data to ensure accurate 1099 reporting. The following steps can be completed at any time prior to Calendar Year End 1099 processing to verify vendor records and related 1099 data. Note: Our generic USAS Calendar Year End Checklist includes these preliminary steps; however, individual ITCs may provide their own versions of the CYE checklist based on their specific policies and procedures. The checklist included in the Appendix is intended as a general guideline only.
To ensure accurate 1099 reporting, it is helpful to review vendors' 1099 Location, Tax ID Type, ID#, the Type 1099, and the YTD Taxable total. USAS offers several ways to verify this information.
One option is to use the Vendors grid, adding these fields as columns by using the MORE button. To prevent receiving an Excessive Query error on the grid, you can use the Advanced Query feature to filter by these same fields. Once set up, queries can also be saved for future use and selected later from the dropdown menu. Once Apply Query is selected, the results will display on the grid. This query example shown is created for all 1099 vendors with a YTD taxable total of $600 or more.
You should also review all Non-1099 vendors to confirm they should not receive a 1099. A separate query can be created for all NON-1099 vendors that have a YTD taxable total of $600 or more
After generating your various queries—whether for all vendors or for a specific 1099 type—you can produce a report of the grid results by selecting the Report button on the grid. Saved queries can also be used within other reports. For example, the SSDT Vendor Listing report, located under Report Manager, allows you to load a saved query from the Configure Filters tab.
The SSDT Vendor Listing report can also assist in reviewing Vendors' 1099 Locations, which determine where the 1099 form will be mailed. Although vendors may have multiple Locations entered on their vendor record, one Location must be specifically marked as the 1099 Location. For more information and examples, please see Volume 7 Issue 12 - December 2024
If updates are needed to the YTD amounts, the Vendor Adjustments option can be used to make these changes. This feature is available on the vendor record and allows adjustments to both the YTD Total and the YTD Taxable Total. The YTD Taxable Total is the amount specifically used for 1099 reporting. More information about Vendor Adjustments can be found here.
Useful links:
During our most recent Fridays with Fiscal session with ITCs, the SSDT Fiscal Support team reviewed various W-2 special reporting scenarios and how they are handled in the USPS software. Please click here to view the recording of that session.
Taxable Benefits Adjustments
When an Adjustment with the type of Taxable Benefits is created, the amount will now be added to Taxable Gross and Total Gross on the Quarter Report. These amounts will be included in the amount listed in the Total Summary section of the report under the Non-Cash Earnings total. Please reference the Reporting Non-Cash Taxable Benefits (NC3) on the Employee's W2 for more details on Taxable Benefits.
The SSDT provides support materials to assist ITCs/districts during Calendar Year End (CYE) processing. On our ITC CYE Meeting wiki page, you’ll find linked support resources for both USAS and USPS. Links found under the “Supporting Documentation” category include resources from our wiki as well as references to external agency publications (such as the IRS, state tax agencies, etc.), all provided here for your convenience.
Vendor Tax ID Number Configuration
USAS provides an optional configuration for Vendor Tax ID numbers that determine how the system validates the Tax ID when creating a new vendor or using an existing vendor on a PO/invoice transaction.
