Current regulations under the Fair Labor Standards Act require hourly and non-exempt employees who work more than 40 hours weekly to be paid overtime at 1.5 times their hourly compensation for any time over 40 hours. Salaried workers who earn more than $35,568 annually are currently exempt from this requirement.
But this is about to change.
1 – On July 1st of this year, salaried workers earning less than $43,888 are entitled to time and a half when working over 40 hours weekly.
2 – As of January 1, 2025, salaried workers earning less than $58,656 will also be entitled to overtime.
3 – The threshold will again be raised on July 1st of 2027.
The current administration is closing the salaried employee loophole on overtime.
Let me leave you with this…
The new Illinois Budget which is headed to the Governor’s Desk for signature includes a brand new Child Tax Credit of up to $300 per qualifying child. This will be provided to eligible low-income families who receive the Earned Income Tax Credit.
In the text of the bill, low income means single taxpayers must earn below $50K annually while MFJ returns must be under $75K. The bill is expected to impact 800K Illinois households.
Take a moment and think about this while realizing that the Earned Income Tax Credit is the most abused federal credit currently in existence. It’s the reason why so many of these returns are audited at the Federal Level.
Early in my career when my practice was still struggling, we used to do off-the-street 1040’s. I’d have a family of six walk in with their Social Security Cards and a W-2 totaling $5,000 that had $400 in federal withholding.
We’d ask whether or not this was the total income for the family. They would assure us that it was and would even sign a liability waiver affirming this fact which absolved us of any responsibility.
We all know there’s no way that anyone can feed a family of six on five grand a year in Chicago. Both parents probably had a job they worked for cash that no one was telling anyone about and obviously the return was fraudulent. I would refuse to do the return and ask the family to leave.
This phenomenon is huge at the National Level. It’s the reason why quickie income tax offices spring up all over our poorest neighborhoods on January 1st and somehow vanish in the middle of April only to re-materialize the following year. The franchises make hundreds of millions every year off of this nightmare.
If I had done that return, after including the refundable Earned Income and Child Tax Credits that family would be entitled to a refund of over $6,000. $400 was withheld and somehow they would potentially get back more than $6K.
And somehow this is still called reasonable and fair. They even still call it a refund. The process was so prevalent that it sickened me to a point where I stopped doing walk-ins at a time when I really needed the money.
But wait…there’s more. Now Illinois will further subsidize the process by adding even more money to the Earned Income Pot this year.
Are there real families that really qualify that this will help? Absolutely. Is there a large percentage that are committing nothing but fraud in claiming these credits? Absolutely.
And Illinois just added to the phenomenon. That’s our tax dollars at work.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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