The TCJA Effect: Qualified Residence Interest

The Tax Cuts and Jobs Act (TCJA) made a significant impact — both directly and indirectly — on the deductibility of various types of interest expense for individuals. One area affected is qualified residence interest.

Two Ways About It

The TCJA affects interest on residential loans in two ways. First, by nearly doubling the standard deduction and placing a $10,000 cap on deductions of state and local taxes, the act substantially reduces the number of taxpayers who itemize. This means that fewer taxpayers will benefit from mortgage and home equity interest deductions. Second, from 2018 through 2025, the act places new limits on the amount of qualified residence interest you can deduct.

Previously, taxpayers could deduct interest on up to $1 million in acquisition indebtedness ($500,000 for married taxpayers filing separately) and up to $100,000 in home equity indebtedness ($50,000 for married taxpayers filing separately).

Acquisition indebtedness is debt that’s incurred to acquire, build or substantially improve a qualified residence, and is secured by that residence. Home equity indebtedness is debt that’s incurred for any other purpose (such as buying a boat or paying off credit cards) and is secured by a qualified residence. A single mortgage could be treated as both acquisition and home equity indebtedness, allowing taxpayers to deduct interest on debt up to $1.1 million.

The TCJA reduced the deduction limit for acquisition indebtedness to interest on up to $750,000 in debt and eliminated the deduction for home equity indebtedness altogether, through 2025. The new limit on acquisition indebtedness doesn’t apply to debt incurred on or before December 15, 2017, subject to an exception for mortgages that were incurred on or before April 1, 2018, in certain circumstances. Specifically, it involves debt incurred pursuant to a written binding contract to purchase a qualified residence executed before December 15, 2017, and scheduled to close before January 1, 2018 (so long as the purchase, as it turned out, was completed before April 1, 2018). And it doesn’t apply to existing mortgages that are refinanced after December 15, 2017, provided the resulting debt doesn’t exceed the refinanced debt.

The elimination of interest deductions for home equity indebtedness, however, applies to existing debt. So, if you were previously deducting interest on up to $100,000 of home equity debt, that interest is no longer deductible. The same holds true for the $100,000 home equity portion of $1.1 million in mortgage debt. Note, however, that interest on a home equity loan used to substantially improve a qualified residence is deductible as acquisition indebtedness (subject to applicable limits).

Review Your Expenses

In light of the TCJA’s changes, you may want to make changes such as paying off home equity loans because interest is no longer deductible. Contact us for help.


Sidebar: Investment Interest Also Affected

The Tax Cuts and Jobs Act (TCJA) also affects investment interest. This is interest on debt borrowed to buy taxable investments (margin loans, for example). Like qualified residence interest, investment interest is an itemized deduction, which is lost if you no longer itemize.

Deductions of investment interest cannot exceed your net investment income, which generally includes interest income and ordinary dividend income, but not lower-taxed capital gains, qualified dividends or tax-free investment earnings. For many people, net investment income is now higher because the TCJA eliminated miscellaneous itemized deductions for such expenses.

Proudly Introducing our FOCUS Intern Class of 2020

We recently welcomed 12 Senior FOCUS Interns to our team! The 2020 FOCUS Interns include Southern Illinois University Edwardsville students Zeke Cassidy, Joe Guithues, Brittany Parker, Cydney Mitchaner, Taylor Townsend, Jason Dempsey, Julia Carroll, and Karla Posos-Beetz; McKendree University students Breanna Ziemer and Alice Ratermann; Emma Gregowicz from Lindenwood University; and Erica Bechtold from Blackburn College.

The FOCUS Program places Senior accounting students throughout all seven of our offices for a Spring Internship. Students who are accepted into the program receive extensive training and real-world experience during our busiest time – tax season. In addition, each intern is entered into a mentor program in order to walk them through training measures and best practices. The paid internship program receives hundreds of applicants each year from colleges throughout both Illinois and Missouri.

Welcome to the team!

FOCUS Interns Zeke Cassidy, Joe Guithues, Brittany Parker, Erica Bechtold, Cydney Mitchaner, Taylor Townsend, Jason Dempsey, Julia Carroll, Breanna Ziemer, Karla Posos-Beetz, Alice Ratermann, and Emma Gregowicz

Welcome Wagon!

We are proud to officially introduce our new Staff Accountants: Jessica Lake, Zach Williams, Evan Tyson, and Jett Durr. All are graduates of Southern Illinois University Edwardsville’s Accounting Program. Jessica will be working out of our Alton office, Zach and Evan will be in Belleville, and Jett in Edwardsville.

We are excited to have you all. Welcome to the team!

Illinois Minimum Wage Law – In a Nutshell

Illinois workers rung in the New Year with an hourly raise. In February of 2019, Governor J.B. Pritzker signed a bill passed by the Senate that sets a gradual increase on the current minimum wage, reaching a total increase to $15.00 per hour in 2025.

The new minimum wage laws began on January 1st, 2020 with an increase from $8.25 per hour to $9.25 per hour. The next increase is set for July 1st, 2020 to $10.00 per hour. We have included the table below to outline the scheduled wage increases.

1/1/20 $9.25
7/1/20 $10.00
1/1/21 $11.00
1/1/22 $12.00
1/1/23 $13.00
1/1/24 $14.00



Under the old law, workers under age 18 AND working 650 hours or less in a calendar year could be paid $.50 per hour less than the applicable minimum wage until 12/31/19.

Example: $8.25 – $.50 = $7.75

Under the new law, workers under 18 working less than 650 hours in a calendar year can be paid under the following rules:

1/1/20 $8.00
1/1/21 $8.50
1/1/22 $9.25
1/1/23 $10.50
1/1/24 $12.00
1/1/25 $13.00


When it comes to tipped employees, they will have a minimum wage of 60% of the applicable wage as long as tips plus wages equals the current wage standard.

Tax Credit

You may have heard rumors of a tax credit for certain employers under the new regulations. The guidelines for earning this credit are…

  • If the employer has 50 or fewer full-time employees (FTE) who make minimum wage,
  • whose average wages for employees earning less than $55,000 per year during reporting period exceeds the average wage paid for employees making less than $55,000 during same reporting period in prior calendar year,
  • limited to tax liability for reporting period, the credit equals..
2020 25% Of wages paid for quarterly reporting periods
2021 21% Same
2022 17% Same
2023 13% Same
2024 9% Same
2025 5% Same
2026 5% For employers with >5 employees
2027 5% For employers with no more than 5 employees


Penalties for Employers

The new law also increases penalties on employers for violating these new wage requirements, including:

  • $100 per affected employee for failure to keep payroll records
  • Civil damage penalties on employers that fail to pay minimum wage (Treble Damages)
  • $1,500 fine for willful disregard of wage requirements


If you have questions on the new Minimum Wage Law, our team is ready and willing to help. Contact us today.



Well Wishes & Congratulations

We’d like to take a moment to recognize two members of our team who recently retired. Principal Steve Pembrook and Firm Administrator Kathy Gillen dedicated a combined total of more than 60 years to our firm and both entered retirement as of December 31st, 2019.

Steve was a dynamic and thoughtful leader of our firm. Serving clients out of our Alton office, he was a senior leader on our Audit and Assurance Team, as well as the Agribusiness Team. Steve’s contributions to our firm can never be measured. Whether through training initiatives or firm growth, he has made a lasting impact on Scheffel Boyle for generations to come.

Kathy worked behind the scenes at Scheffel Boyle, ensuring our team had quality benefits and administrative support. She was the main contact for all seven of our offices and wore many hats throughout her time with us. Kathy always made herself available to both clients and staff. She was hardworking and a valuable person to have on our team for so many years.

Congratulations to both Steve and Kathy on entering this new and exciting phase of life. Thank you for dedicating your impressive careers to our firm. We wish you both all the best and you will be greatly missed!

Extended Tax Season Hours Begin January 15th

To better accommodate our clients, we extend our office hours during tax season to allow for evening and weekend appointments. Please note these hours listed below so we can better serve you. Thank you for choosing Scheffel Boyle!

Monday through Thursday

8am to 8pm


8am to 6pm


8am to 3pm (through February)

8am to 5pm (thereafter through April 15)

Dennis Ulrich & Jeff Westerhold Honored by Rotary International

Managing Principal Dennis Ulrich and Scheffel Financial Services, Inc. Principal Jeff Westerhold were among five individuals recently honored by Rotary International with the Paul Harris Fellow recognition. The Paul Harris Fellow program was established in Rotary in 1957 with an overall purpose to honor and recognize individuals for their “generous, ongoing support of the Rotary Foundation.”

Dennis and Jeff have been active supporters and members of the Edwardsville and Goshen Rotary clubs for many years. Congratulations to you both on this great achievement!

Click here to learn more about the Paul Harris Fellow recognition.

Paul Harris Fellow Honorees

Matt Warren, Dennis Ulrich, Nicole Kline, Michael Wenos, Jeff Westerhold

Signed, Sealed, & Delivered!

We are excited to announce that our care packages for the troops have been mailed and delivered to our much deserving deployed soldiers. Through our Friends Trivia fundraiser held this past November, our team raised the money necessary to send some treats and basic essentials to 10 soldiers and one troop currently stationed overseas.

So why the care packages? Well, each year, our employees perform a service project for our Scheffel Boyle Shares program. For this year’s Shares project, our team set a goal to send care packages to deployed troops either from our local area or with connections in our community. We did our best to personalize the packages for each soldier, and we hope that the treats and comforts of home somehow brighten their day and make their time away a little easier.

We would like to send a sincere thank you to everyone who supported this project. Our team did a great job not only organizing the trivia fundraiser, but also assembling and mailing a whopping 34 care packages for our troops. And, of course, thank you to our servicemen and women for their sacrifice and service. We appreciate all you do.