Keep doing tactics and either ignore the timer or turn it off. Then focus on getting your passed percentage as high as possible; don't worry about ratings. You might think about resetting your rating/history so you start with a clean slate.
How to Improve at Tactics

Yea, I turn off the timer myself. My pass rate is higher now but my rating still doesn't seem to improve much for some reason. In my last ~50 hours with TT I've gone up maybe 40 points. I must be doing something wrong, I should be making more and faster progress. My current USCF is 1380 what does that make tactics for me? An UBER weakness?
From what I can tell from our game and the tournament you seem like you should be at least about 1200. Some very nice closed positional skills.
As far as seeing tactics in games I seem to be alright at it. Do you 'safety check' every move before you make it? looking for opponents threats? Maybe part of it is realizing the positions where tactics can arise. I imagine this is pretty important too. I have a friend who had his TT well over 1900 and he can see the tactics much much faster than I do, but in our games I win just as much on tactics since I'm more reliable

I think the best method is to focus on doing lots and lots of easy tactics. You should get to the point where you see simple forks, mates in 1, etc. almost instantly. Only then start moving on to slightly more difficult tactics. By being able to instantly recognize the simpler tactics, you’ll have a better chance of recognizing them and playing them in a game. It also makes it easier to solve the more difficult tactics, because difficult tactics are often just a combination of several easy ones. For example a simple tactic might be to fork the king and queen with a knight, but the more difficult tactic is to remove the defender of the forking square and THEN play the fork.
Another thing that I did which really helped is take a lot of time to go over the ones you get wrong. Don’t just immediately move on to the next problem. Look at what the theme is for the problem that you failed and try to take note of why you missed it. For instance, did you not notice that a certain piece was pinned? Then make a mental note to pay more attention to those types of things in future problems.

Tactics are the #1 problem for pretty much everyone. Ofcourse the saying chess is 99% tactics is quite true in theory.
If you could calculate every position and line to a conclusion you would need to know nothing about positional play. But this is ofcourse not possible.
So for humans tactics are all about pattern recognition. Recognising complex patterns instantly so you don't have to calculate them strange as that may sound.
The difference between a novice and a GM doesn't have to be calculation speed. As an OTB ~1900 player I don't really calculate faster than when I was a 1000. I still look at perhaps 1-2 moves a second but my brain is much better at instantly evaluating a "branch" in my calculation and disregarding obviously crappy ones. (where I have a conclusion.) For a GM it's yet a 1000 times more efficiently so..I imagine.
It takes time, each game (especially when you lose) you learn new patterns. Solving tactical positions DOES help but perhaps not right away. They have to become second nature for your brain. I can say at this point I do recognise quite a lot of patterns from tactical exercises in my games, and feel it's starting to help me quite a bit. But that took me many years.

I think that you have a much bigger problem than tactics. I think that you need to figure out why you play so much better on the internet than you do OTB. Maybe nerves? Maybe you don't play well on a three dimensional board? It could be various things. I assume that your rating increased by 123 in this tournament so that is good but your ratings on this site put you in the 1600-1700 USCF rating range not 1200!

I think that you have a much bigger problem than tactics. I think that you need to figure out why you play so much better on the internet than you do OTB. Maybe nerves? Maybe you don't play well on a three dimensional board? It could be various things. I assume that your rating increased by 123 in this tournament so that is good but your ratings on this site put you in the 1600-1700 USCF rating range not 1200!
Chess.com ratings don't really show what your USCF rating should be. The one that seems that most people think is the most predictive is Live and Live standard and even then, they measure different time controls for the most part (my Live blitz and standard are closest to my OTB regular rating for example).
Online ratings are easily 300-400 points higher than OTB and sometimes higher. Of course, it depends on how one plays coorespondence but in many of the cases I have seen of people that play both (people I know in real life) that is often the case.

As far as ratings, I've heard USCF ratings in our area are a lot lower than USCF ratings in other areas for the same playing strength. Also, in general I think online ratings are inflated anyway. Or at least until you get to maybe 1600. At some point with the player pool, really good players aren't all that high in rating in live standard. But as people have mentioned there's a number of other factors involved, and I'm not entirely sure how I translate myself. I'm also not sure correspondance is a very good predictor and it seems to be very inflated.

Nice analysis! Hadn't seen this before. Bookmarked the link. As a statistical person myself I do recognize some problems with it but it's a nice starting point. I did something similar myself with USCF ratings but didn't go into that level of depth. The regression findings I find quite surprising. Considering I've known and played some people with for example 2195 FIDE (verified) 2700 tactics but only 1850 live standard. And it's not because he doesn't play a lot. These numbers and what I've seen would indicate that there should be a negative intercept and a slope greater than 1 not the other way around. Also the average rating for titled players is much much lower than their actual FIDE rating, especially for standard. The most important though, is that the people that actually report their USCF and FIDE ratings tend to be proud of them and people who have much lower USCF and FIDE ratings than chess.com are less likely to report.
My findings did support, however that starting at about 1500 live standard, the average reported USCF rating is higher than live. I just challenge the representativeness of the sample.

Agreed. I was perhaps too generous with my 1600-1700 assessment (though that is what those formulae will give you), I just wanted to my make my point clear.

hmm for me a free member my rating goes up very slowly, so it would take a long long time for me to get high rated....

Yea, since the average the formulas used is 1620 it's probably most accurate for people around 1700 live standard. I'm also not sure how big of a difference location makes on USCF rating, but it's also possible in my area that USCF ratinngs are as much as 100 points deflated here than other areas in the country. Even with that you're right, his ratings look a lot better online. Maybe 1400-1500 would be a better estimate with this in mind. In our game (the last game in the eastern open both tied for 3rd place going in) he played better with openings and positionally than anyone I've played <1400 USCF. I only won because of a fairly simple tactical blunder. So it's definitely possible with a few adjustments or familiarity with tournament settings this rating will go up considerably.
Active, do you have a FIDE rating?

Have I got a blog for you!! I had the exact same problem with the TT, but now use it this way:
http://www.chess.com/blog/OldChessDog/tactical-training-cheating2
I also highly recommend Neiman's book:
Hey, guys. I am rated 1103 U.S.C.F. and I know my biggest problem in chess is tactics. I use the tactics trainer a lot on chess.com and I have a tactics rating that fluctuates between 1550 and 1700. I don't feel it is helping me at all in my tactics in games. First off, I don't feel it is realistic because there is never a situation in chess when you know there is a tactic. Secondly, I feel that the timer makes it really difficult because I don't have the time to calculate all the variations. It encourages making random forcing moves rather than actually calculating everything. One of my biggest problems with chess in general is that I struggle in time trouble. In tournament games with an hour of time, I frequently lose in the exact same manner- I get a decent position, get down on time, fail to calculate correctly with less than two minutes of time and blunder the game away. I don't feel the tactics trainer helps me with this.
I play closed openings: 1. d4, as well as 1. e4 c6 and 1. d4 d5 as black. I sometimes as an experiment play open games in my blitz games, as I used to play the Italian Game, and I often have trouble in blitz games because the open positions make it difficult for me to calculate everything I have to calculate in a short period of time. I know my rating kinda sucks, and so maybe I'm not justified in saying this, but I really want to be a positional player. I love positional games. I play to have an "octopus knight" or to get connected passed pawns that can wreak havoc, or to exploit a weak isolated pawn in my opponent's camp. This is the type of chess I like to play.
I have an enormous tournament coming up this weekend. I do feel that my rating is lower than my skill level since all my chess.com ratings are 200+ points above it; I feel I have about a 1250-1300 skill level or so. But I know I need to work on this part of my game in order to improve. It would be nice if anyone could tell me what I should be doing for A) the tournament coming up and B) for the rest of my chess career in terms of this problem. Thank you.