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Don't HR Alone #13 - W-2's, Minimum Wage, and Reciprocal States

Lawmakers approve $15 an hour minimum wage bill — ILLINOIS — State legislation

On May 31, the Illinois Legislature finalized legislation said to be the first $15 an hour minimum wage bill passed by state lawmakers. The development has generated substantial anxiety in the business community—Republican Governor Bruce Rauner has called it "extreme," according to media reports.

An amendment to H.B. 81 sets a schedule for minimum wage increases in Illinois. The amendment cleared the state house by a vote of 61-53 on May 30. The following day, the senate concurred in the amendment by a 30-23 ballot.

If signed by the governor, and the consensus is that he likely will veto the bill, the amendment to S.B. 81 would raise the minimum wage for employees at least 18 years of age to $15 an hour in 2022. Under the phased-in schedule, the minimum wage would increase to $9 on January 1, 2018; $10 on January 1, 2019; $11.25 on January 1, 2020; $13 on January 1, 2021; and $15 on January 1, 2022.

Employees less than 18 years old who have worked more than 650 hours during the calendar year would be paid less: $8 on January 1, 2018; $8.50 on January 1, 2019; $9.25 on January 1, 2020; $10.50 on January 1, 2021; and $12 on and after January 1, 2022.

Michigan discusses reciprocal agreements — MICHIGAN — Withholding and Reporting

The Michigan Department of Treasury (department) has issued a revenue administrative bulletin describing the relevance of reciprocal agreements to Parts 1 and 3 of the Michigan Income Tax Act and nonresident taxpayers. The bulletin addresses the effect of reciprocal agreements between Michigan and other states on income tax liability and withholding requirements. A Michigan resident will be exempt from any income tax imposed by a reciprocal state on compensation (salaries, wages and commissions) earned for personal services performed in the reciprocal state. Similarly, a resident of a reciprocal state who earns compensation for services performed in Michigan will be exempt from Michigan income tax. Reciprocal agreements do not apply to independent contractors, local taxes, or income other than compensation. Michigan has reciprocal agreements with Wisconsin, Indiana, Kentucky, Illinois, Ohio, and Minnesota. A Michigan resident working in a reciprocal state may ask his or her employer to voluntarily withhold Michigan income tax on compensation. The employer may voluntarily register with the department to withhold Michigan income taxes for the Michigan residents working in its state. In case the Michigan resident’s reciprocal state employer does not withhold income taxes from his or her compensation he or she must pay quarterly estimates of tax if his or her annual tax liability is expected to exceed $500. Employers located in Michigan must withhold income tax from all compensation paid to nonresident employees for work done in Michigan, unless subject to a reciprocal agreement. However, if a Michigan employer has erroneously withheld and remitted income taxes on compensation exempt under a reciprocal agreement from a nonresident worker from a reciprocal state the nonresident taxpayer can claim a refund. (Revenue Administrative Bulletin 2017-13, Michigan Department of Treasury, June 1, 2017.)

Minnesota changes due date for W–2s — MINNESOTA — Withholding and Reporting

Minnesota Gov. Mark Dayton has signed an omnibus tax bill that makes a number of changes to corporate franchise (income) and personal income taxes, including changing the required date for employer filing of W-2 forms with Minnesota Department of Revenue from February 28 to January 31, effective for wages paid after December 31, 2016. (Ch. 1 (H.F. 1), Laws 2017, First Special Session, effective as noted; House Research Bill Summary, Minnesota House of Representatives Research Department, May 25, 2017.)

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