Do 401k deferrals affect tax-free overtime?

[JoeyVegas]

A taxpayer has gross wages of 100k including 20k of total overtime shown on his last paystub. He defers 30k into his 401k so his Box#1 taxable wages is 70k. Do we use the 20k overtime on schedule 1-A creating a deduction of $6,666 regardless of the money deferred into the 401k? So basically do retirement deferrals need to be considered at all when computing the tax-free overtime? Is an allocation needed since theoretically some of the overtime is included in taxable wages and some is being deferred into the 401k.

[TaxGuyBill]

You have a valid idea, but there is currently no indication of doing that in the law or current IRS guidance.

That could change in the future, but as of now, there is no indication that it should be reduced so I would take the entire amount.