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Correcting code TT or TP: Form W-2c and the $100 de minimis safe harbor

Last reviewed October 6, 2026, against FS-2026-13 (August 2026) and the 2026 W-2/W-3 instructions.

Mistakes in code TT or code TP are corrected with Form W-2c. For tax year 2026 there is no special penalty relief like the one for 2025.

General information, not tax or legal advice. The employer remains responsible for its Forms W-2. IRS FAQs are not binding law. Check your facts with a CPA or your payroll provider. Halfmark is not affiliated with the IRS.

Corrections are required

If an employer discovers an error in box 12 code TT, it must file Form W-2c with the SSA and furnish it to the employee as soon as possible; incorrect forms may be subject to penalties under sections 6721 and 6722 (FS-2026-13, Q11). The 2025 transition relief (Notice 2025-62) applied to tax year 2025 only, and the IRS says no relief is available for later years (FS-2026-13, Q20).

Why employees will ask

An employee can deduct only the qualified overtime shown on a properly furnished Form W-2 or W-2c. If the amount is understated, the employee must ask the employer for a Form W-2c; Form 4852 does not work for this (FS-2026-13, Q20, Q22, Q23). If it is overstated, the employee may use only the amount actually paid (Q21).

The de minimis safe harbor

For Forms W-2 already filed, the instructions describe a safe harbor for small dollar errors: it generally applies if no single amount in error differs from the correct amount by more than $100 and no single amount of tax withheld differs by more than $25. If it applies, you don't have to correct the form to avoid penalties, but if the payee elects for the safe harbor not to apply, you may have to issue a corrected return (2026 General Instructions for Forms W-2 and W-3, Penalties; Treas. Reg. 301.6721-1(d)).

Keep in mind: even when the safe harbor protects the employer from penalties, an employee with an understated code TT can only deduct what the form shows unless they get a Form W-2c (FS-2026-13, Q22). Halfmark marks differences within $100 but still lists them as W-2c candidates.

Before the forms are filed

The safe harbor is about forms already filed. Before February 1, 2027, the simplest fix is to correct the amounts in payroll so the original Forms W-2 are right.

Penalty amounts for 2026 forms

For returns due after December 31, 2026, the instructions list $60 per Form W-2 if you correctly file within 30 days after the due date, $130 if you correctly file more than 30 days after the due date but by August 1, and $340 if you file after August 1, don't file corrections or don't file, with annual maximums of $698,500 / $2,095,500 / $4,191,500 ($244,500 / $698,500 / $1,397,000 for small businesses with average annual gross receipts of $5 million or less). Intentional disregard: at least $690 per form with no maximum. A separate, parallel penalty applies to incorrect employee copies (2026 General Instructions for Forms W-2 and W-3, Penalties).

List W-2c candidates with the $100 test: import registers and hours, recompute code TT per workweek, and compare with your provider. Runs in your browser; payroll data is not uploaded.

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