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.

DATE HOURLY WAGE
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
1/1/25

$15.00

 

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:

DATE HOURLY WAGE
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..
YEAR CREDIT CONSIDERATIONS
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


Fridays

8am to 6pm


Saturdays

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.

 

Do You Know Your Tax Bracket?

Although the Tax Cuts and Jobs Act (TCJA) generally reduced individual tax rates through 2025, there’s no guarantee you’ll receive a refund or lower tax bill. Some taxpayers have actually seen their taxes go up because of reductions or eliminations of certain tax breaks. For this reason, it’s important to know your bracket.

Some single and head of household filers could be pushed into higher tax brackets more quickly than was the case pre-TCJA. For example, the beginning of the 32% bracket for singles for 2019 is $160,725, whereas it was $191,651 for 2017 (though the rate was 33% then). For heads of households, the beginning of this bracket has decreased even more significantly, to $160,700 for 2019 from $212,501 for 2017.

Married taxpayers, on the other hand, won’t be pushed into some middle brackets until much higher income levels through 2025. For example, the beginning of the 32% bracket for joint filers for 2019 is $321,450, whereas it was $233,351 for 2017. (Again, the rate was 33% then.)

As before the TCJA, the tax brackets are adjusted annually for inflation. Because there are so many variables under the law, it’s hard to say exactly how a specific taxpayer’s bracket might change from year to year. Contact us for help assessing what your tax rate likely will be for 2020 — and for help filing your 2019 tax return.

Mark Your Calendars!

With a new year, comes new deadlines to keep in mind. Mark your calendars for these important tax deadlines for the first quarter of 2020.

January 15 — Individual taxpayers’ final 2019 estimated tax payment is due.

January 31 — File 2019 Forms W-2 (“Wage and Tax Statement”) with the Social Security Administration and provide copies to your employees.

  • File 2019 Forms 1099-MISC (“Miscellaneous Income”) reporting nonemployee compensation payments with the IRS and provide copies to recipients.
  • Most employers must file Form 941 (“Employer’s Quarterly Federal Tax Return”) to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2019. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 11 to file the return. Employers who have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944 (“Employer’s Annual Federal Tax Return”).
  • File Form 940 (“Employer’s Annual Federal Unemployment [FUTA] Tax Return”) for 2019. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 11 to file the return.
  • File Form 943 (“Employer’s Annual Federal Tax Return for Agricultural Employees”) to report Social Security, Medicare and withheld income taxes for 2019. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 11 to file the return.
  • File Form 945 (“Annual Return of Withheld Federal Income Tax”) for 2019 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, etc. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 11 to file the return.

February 28 — File 2019 Form 1096, along with copies of information returns with the IRS.

March 16 — 2019 tax returns must be filed or extended for calendar-year partnerships and S corporations. If the return isn’t extended, this is also the last day for those types of entities to make 2019 contributions to pension and profit-sharing plans.

Every Business Owner Needs an Exit Strategy

As a business owner, you have to keep your eye on your company’s income and expenses and applicable tax breaks. But you also must look out for your own financial future. And that includes creating an exit strategy.


Buy-Sell Agreement

When a business has more than one owner, a buy-sell agreement can be a powerful tool. The agreement controls what happens to the business if a specified event occurs, such as an owner’s retirement, disability or death. A well-drafted agreement provides a ready market for the departing owner’s interest in the business and prescribes a method for setting a price for that interest. It also allows business continuity by preventing disagreements caused by new owners.

A key issue with any buy-sell agreement is providing the buyer(s) with a means of funding the purchase. Life or disability insurance often helps fulfill this need and can give rise to several tax issues and opportunities. One of the biggest advantages of life insurance as a funding method is that proceeds generally are excluded from the beneficiary’s taxable income, provided certain conditions are met.

Succession Within the Family

You can pass your business on to family members by giving them interests, selling them interests or doing some of each. Be sure to consider your income needs, the tax consequences, and how family members will feel about your choice.

Under the annual gift tax exclusion, you can currently gift up to $15,000 of ownership interests without using up any of your lifetime gift and estate tax exemption. Valuation discounts may further reduce the taxable value of the gift.

With the gift and estate tax exemption approximately doubled through 2025 ($11.4 million for 2019), gift and estate taxes may be less of a concern for some business owners. But others may want to make substantial transfers now to take maximum advantage of the high exemption. What’s right for you will depend on the value of your business and your timeline for transferring ownership.

Get Started Now

To be successful, your exit strategy will require planning well in advance of retirement or any other reason for ownership transition. Please contact us for help.

What to do About Fraudulent Credit or Debit Card Charges

It’s an awful feeling to learn that someone has used your credit or debit card to make fraudulent charges. Whether you’re liable typically depends on the type of card, whether you still possess the card and when you alert the issuer.


Credit Cards

If your card is lost or stolen and you report it to the card provider before your card is used in a fraudulent transaction, you can’t be held responsible for any unauthorized charges. If you report it after unauthorized charges have been made, you may be responsible for a specified dollar amount in charges. Some card issuers have decided not to hold their customers liable for any fraudulent charges regardless of when they notify the card company. And if your account number is stolen but not the actual card, your liability is $0. But either you or the card issuer must identify the fraudulent transactions for them to be removed.

When reporting a card loss or fraudulent transaction, contact the issuer via phone. Then follow up with a letter or email. This should include your account number, the date you noticed the card was missing (if applicable), and the date you initially reported the card loss or fraudulent transaction.

Debit Cards

If you report a missing debit card before any unauthorized transactions are made, you aren’t responsible for any unauthorized transactions. If you report a card loss within two business days after you learn of the loss, your maximum liability for unauthorized transactions is $50.

But if you report the card loss after two business days but within 60 calendar days of the date your statement showing an unauthorized transaction was mailed, liability can jump to $500. Finally, if you report the card loss more than 60 calendar days after your statement showing unauthorized transactions was mailed, you could be liable for all charges.

What if you notice an unauthorized debit card transaction on your statement, but your card is still in your possession? You have 60 calendar days after the statement showing the unauthorized transaction is mailed to report it and avoid liability.

Safest Choice

If you’re unsure about the specific conditions that trigger liability for unauthorized charges, contact your card issuer.

Determining an Employee’s “Home” for Reimbursement Purposes

Despite the prevalence of Web-based meetings, many of today’s businesses still have plenty of employees who travel. If you still have sales staff or other workers out on the road, and you’re reimbursing them on a tax-free basis for their travel expenses, it’s important for you as the employer to stay up to date on the rules that determine the location of a person’s tax home.


Principal Workplace

Internal Revenue Code Section 162 imposes three requirements for travel expense deductions: 1) The expenses must be ordinary and necessary, 2) they must be incurred while traveling away from the individual’s tax home, and 3) they must be incurred in pursuit of business.

An employee’s “tax home” is generally determined by where he or she works, not by where the employee lives. A tax home isn’t limited to one building or property; it includes the entire city or area in which the tax home is located. For employees with one regular workplace, their tax home is that workplace. If an employee has more than one regular workplace, his or her tax home is the employee’s principal workplace.

If an employee has no principal workplace, his or her tax home is the employee’s “regular place of abode in a real and substantial sense.” Those who have no principal workplace and no regular abode are considered “itinerants,” and their tax home is wherever they work. Itinerants can never get a travel expense deduction or qualify for tax-free reimbursement of their travel expenses because they’ll never be “away from home.”

Three-Factor Test

The IRS uses a three-factor test to determine whether an employee with no principal workplace has a tax home or is itinerant. The three factors involve whether the employee:

1. Performs a portion of his or her work near the claimed abode and uses that abode for lodging purposes when working there,
2. Must leave the abode to perform his or her job, which duplicates the employee’s living expenses incurred at the abode, and
3. Hasn’t abandoned the vicinity of his or her historical place of lodging and the abode; has marital or lineal family members currently residing at the abode; or uses the abode frequently for lodging.

If all three factors are satisfied, the individual’s abode is the tax home. If only two are satisfied, the answer will depend on the facts and circumstances, so you may need to consult with your tax advisors. If only one factor is satisfied, the employee is an itinerant.

The actual or expected length of an employee’s assignment to another location may affect whether the expenses are treated as incurred while “away from home.” Assignments of indefinite duration can change a taxpayer’s tax home, but temporary assignments won’t if the assignment is realistically expected to last, and in fact lasts, for one year or less.

Importance of Substantiation

Finally, keep in mind that travel expenses generally must be substantiated with information about the amount, time, place and business purpose of each expense. We can help you determine your employees’ respective tax homes and follow the rules.