Prop Pay / Stipend count as deductible OT under OBBBA?

Forum|Forum|3 months ago
March 23, 2026
2 replies
16 views

Client : Teacher
Pay : Stipend from Prop 28

I have a client telling me their coworker(s) have deducted this pay as "overtime" based on advice from their tax preparer. I have reviewed the paystub and that pay was a separate line item (labeled "LMS Liaisons"). This LMS payment was considered "extra hours" according to the client. Teachers are salaried so I wouldn't expect any OT deductions.

If someone has more knowledge that I don't can you please inform me how this does (or does not) qualify for the OT deduction?

ProSeries Professional

Best answer by IRonMaN

Sounds like they were paid for doing some additional duties. The overtime deduction follows the Fair Labor Standards Act and the deduction is only allowed for the "half time" of time and a half overtime pay. Tell your client just because someone deducted something that they weren't entitled to doesn't mean everyone else is entitled to the deduction.

IRonMaNAnswer

Level 15

Sounds like they were paid for doing some additional duties. The overtime deduction follows the Fair Labor Standards Act and the deduction is only allowed for the "half time" of time and a half overtime pay. Tell your client just because someone deducted something that they weren't entitled to doesn't mean everyone else is entitled to the deduction.

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