Ten IRS Tips to Help You Choose a Tax Preparer

Many people pay to have their taxes prepared. You need to be careful when you pick a preparer to do your taxes. You are legally responsible for all the information on the tax return even if someone else prepares it. Here are 10 IRS tax tips to help you choose a tax preparer:

1. Check the preparer’s qualifications.  All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. The IRS will soon offer a new Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on IRS.gov. You will be able to use this tool to help you find a tax return preparer with the qualifications that you prefer. The Directory will be a searchable and sortable listing of certain preparers with a valid PTIN for 2015. It will include the name, city, state and zip code of:

  • Attorneys.
  • CPAs.
  • Enrolled Agents.
  • Enrolled Retirement Plan Agents.
  • Enrolled Actuaries.
  • Annual Filing Season Program participants.

2. Check the preparer’s history.  You can check with the Better Business Bureau to find out if a preparer has a questionable history. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status.”

3. Ask about service fees.  Avoid preparers who base their fee on a percentage of your refund or those who say they can get larger refunds than others can. Always make sure any refund due is sent to you or deposited into your bank account. You should not have your refund deposited into a preparer’s bank account.

4. Ask to e-file your return.  Make sure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns generally must e-file their clients’ returns. The IRS has safely processed more than 1.3 billion e-filed tax returns.

5. Make sure the preparer is available.  You need to ensure that you can contact the tax preparer after you file your return. That’s true even after the April 15 due date. You may need to contact the preparer if questions come up about your tax return at a later time.

6. Provide tax records.  A good preparer will ask to see your records and receipts. They ask you questions to report your total income and the tax benefits you’re entitled to claim. These may include tax deductions, tax credits and other items. Do not use a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.

7. Never sign a blank tax return.  Do not use a tax preparer who asks you to sign a blank tax form.

8. Review your return before signing.  Before you sign your tax return, review it thoroughly. Ask questions if something is not clear to you. Make sure you’re comfortable with the information on the return before you sign it.

9. Preparer must sign and include their PTIN.  Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.

10. Report abusive tax preparers to the IRS.  You can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

Top 10 Tax Facts about Exemptions and Dependents

Nearly everyone can claim an exemption on their tax return. It usually lowers your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are the top 10 tax facts about exemptions to help you file your tax return.

1. E-file your tax return.  Filing electronically is the easiest way to file a complete and accurate tax return. The software that you use to e-file will help you determine the number of exemptions that you can claim. AFS Taxsavers E-files your return!

2. Exemptions cut income.  There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $3,950 for each exemption you claim on your 2014 tax return.

3. Personal exemptions.  You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse: had no gross income, is not filing a tax return, and was not the dependent of another taxpayer.

4. Exemptions for dependents.  You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative who meets a set of tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim on your tax return.

5. Report health care coverage. The health care law requires you to report certain health insurance information for you and your family. The individual shared responsibility provision requires you and each member of your family to either:

• Have qualifying health insurance, called minimum essential coverage, or

• Have an exemption from this coverage requirement, or

• Make a shared responsibility payment when you file your 2014 tax return.

6. Some people don’t qualify.  You normally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.

7. Dependents may have to file.  A person who you can claim as your dependent may have to file their own tax return. This depends on certain factors, like the amount of their income, whether they are married and if they owe certain taxes.

8. No exemption on dependent’s return.  If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person on your tax return. This rule applies because you can claim that person is your dependent.

9. Exemption phase-out.  The $3,950 per exemption is subject to income limits. This rule may reduce or eliminate the amount you can claim based on the amount of your income.

10. Try the IRS online tool.  Use the Interactive Tax Assistant tool on IRS.gov to see if a person qualifies as your dependent.

Six Tips on Who Should File a 2014 Tax Return

Most people file their tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. This year, there are a few new rules for some who must file. Here are six tax tips to help you find out if you should file a tax return:

1. General Filing Rules.  Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and 28 years old you must file if your income was at least $10,150. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.

2. New for 2014: Premium Tax Credit.  If you bought health insurance through the Health Insurance Marketplace in 2014, you may be eligible for the new Premium Tax Credit. You will need to file a return to claim the credit. If you purchased coverage from the Marketplace in 2014 and chose to have advance payments of the premium tax credit sent directly to your insurer during the year you must file a federal tax return. You will reconcile any advance payments with the allowable Premium Tax Credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The new form will have information that you need to file your tax return.

3. Tax Withheld or Paid.  Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.

4. Earned Income Tax Credit.  Did you work and earn less than $52,427 last year? You could receive EITC as a tax refund if you qualify with or without a qualifying child. You may be eligible for up to $6,143.

5. Additional Child Tax Credit.  Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.

6. American Opportunity Credit.  The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student.  You or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify.

Average Tax Prep Fee Inches Up to $273

The average fee for preparing a tax return, including an itemized Form 1040 with Schedule A and a state tax return, will increase a few dollars to $273 this year, a 4.6 percent increase over the average fee of $261 last year, according to a survey by the National Society of Accountants.

The figure also represents an 11 percent increase from two years ago when the survey was conducted.

The average cost to prepare a Form 1040 and state return this season without itemized deductions is expected to be $159, also a 4.6 percent increase over the average fee last year, which was $152. It is an 11.2 percent increase from two years ago.

“When you consider that it takes the average taxpayer five hours to complete a tax return, this is a very strong value,” said NSA executive vice president John Ams in a statement. “The tax code continues to become more complex each year, including some new Affordable Care Act reporting requirements. Professional tax preparers may also be able to find tax deductions and credits that may taxpayers might not notice.”

The NSA collected the fee information during a survey of preparers. The tax and accounting firms surveyed are owners, principals, and partners of local “Main Street” tax and accounting practices who have an average of more than 27 years of experience.

NSA member tax preparers typically hold multiple credentials that demonstrate their expertise, including Enrolled Agent, CPA, Accredited Tax Preparer, Accredited Tax Advisor, and others.

The survey also reported the average fees for preparing additional Internal Revenue Service (IRS) tax forms, including $174 for a Form 1040 Schedule C (business), $634 for a Form 1065 (partnership), $817 for a Form 1120 (corporation), $778 for a Form 1120S (S corporation), $457 for a Form 1041 (fiduciary), $688 for a Form 990 (tax exempt), $68 for a Form 940 (Federal unemployment), $115 for Schedule D (gains and losses), $126 for Schedule E (rental) and $158 for Schedule F (farm).

The NSA noted that the fees vary by region, firm size, population, and economic strength of an area.

The average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return in each U.S. census district are:

  • New England (CT, ME, MA, NH, RI, VT) — $246
  • Middle Atlantic (NJ, NY, PA) — $314
  • South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) — $268
  • East South Central (AL, KY, MS, TN) — $262
  • West South Central (AR, LA, OK, TX) — $205
  • East North Central (IL, IN, MI, OH, WI) — $240
  • West North Central (IA, KS, MN, MO, NE, ND, SD) — $198
  • Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) — $256
  • Pacific (AK, CA, HI, OR, WA) — $348

Most accounting firms offer prospective clients a free consultation, the NSA pointed out, which can be worth well over $100 based on the hourly fees of most tax preparers.

All the fees cited assume a taxpayer has gathered and organized all the necessary information.

Taxpayers should also make sure they provide information on time to avoid additional fees, the NSA noted. Many tax preparers will charge an average fee of $114 for dealing with disorganized or incomplete files.

Some will charge an average fee of $42 to file an extension, an average fee of $88 to expedite a return, and an average fee of $93 if information is not provided in advance of an agreed-upon deadline. For taxpayers who are audited by the IRS, the average hourly fee to handle the audit is $144.


From accountingtoday.com

By Michael Cohn

January 14, 2015

 

Michigan Exempts 100% Disabled Honorably Discharged Veterans from Property Taxes

AFS Taxsavers Inc. would like to Thank and remember all Men and Women who served and sacrificed for us to protect the freedoms that we enjoy.
 

If you are a Veteran, you may be able to take advantage of this “disabled veteran” law that was passed last year.

Legislation in Michigan Exempts 100% Disabled Honorably  Discharged Veterans from Property Taxes

Real property used and owned as a homestead by a disabled veteran who was discharged from the armed forces of the United States under honorable conditions or by an individual described in subsection (2) is exempt from the collection of taxes under this act. To obtain the exemption, an affidavit showing the facts required by this section and a description of the real property shall be filed by the property owner or his or her legal designee with the supervisor or other assessing officer during the period beginning with the tax day for each year and ending at the time of the final adjournment of the local board of review. The affidavit when filed shall be open to inspection. The county treasurer shall cancel taxes subject to collection under this act for any year in which a disabled veteran eligible for the exemption under this section has acquired title to real property exempt under this section. Upon granting the exemption under this section, each local taxing unit shall bear the loss of its portion of the taxes upon which the exemption has been granted.


For purposes of this law “disabled veteran” means a person who is a resident of this state and who meets 1 of the following criteria:

  • Has been determined by the United States department of veterans affairs to be permanently and totally disabled as a result of military service and entitled to veterans’ benefits at the 100% rate.
  • Has a certificate from the United States veterans’ administration, or its successors, certifying that he or she is receiving or has received pecuniary assistance due to disability for specially adapted housing.
  • Has been rated by the United States department of veterans affairs as individually unemployable.

 

If a disabled veteran who is otherwise eligible for the exemption under this section dies, either before or after the exemption under this section is granted, the exemption shall remain available to or shall continue for his or her unremarried surviving spouse. The surviving spouse shall comply with the requirements of subsection (1) and shall indicate on the affidavit that he or she is the surviving spouse of a disabled veteran entitled to the exemption under this section. The exemption shall continue as long as the surviving spouse remains unremarried.

Please let any family and friends know about this law that might be able to take advantage of it.

If you have any questions please call the office at 734-464-3660.

Better Brace Yourself for a Tax-Break Smackdown

There may be fewer changes to the federal tax code this year than in 2013, but the handful that exist could still impact what you owe. Some, like the new health insurance tax credit, could put more jingle in your pocket, while the expiration of more than four dozen temporary tax breaks that Congress has yet to renew might instead leave students, teachers, retirees and homeowners out in the cold.

ACA – Affordable Care Act (Obama Care)

First and foremost, all taxpayers this year will see a new check box on their 1040 federal tax return, where they’ll be required to disclose whether they have had qualified health insurance all year, per the Affordable Care Act mandate.

That is by far the biggest change this year, because this is the year when the individual mandate goes into effect.  If you purchased insurance through the health-care exchanges, or marketplace, you’re going to get a brand-new form in the mail called a1095A. Keep it in a safe place for filing your return.

If you or your dependents did not obtain minimal essential coverage, you will pay a penalty equal to 1 percent of your yearly household income, or a maximum of $95 per person, on your 2014 federal income tax return, due April 2015. That penalty increases to 2 percent of household income, or $325 per person, in 2015; and 2.5 percent of income, or $695 per person, in 2016.

A few exemptions exist. You may be able to avoid the penalty, for example, if you are uninsured for fewer than three months out of the year, if the lowest-priced coverage available to you exceeds 8 percent of your income or you don’t file a tax return because your income is too low.

Taxpayers with moderate income who obtain their health insurance through the Health Insurance Marketplace may also be eligible for a new premium tax credit to help defray the cost of coverage. Determining eligibility, however, is complicated and is calculated based on household income, the number of exemptions you already claim and the federal poverty line for your family size.

Foreign Bank / Investments

U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during part of the year, have long been required to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts.

In most cases, affected taxpayers must fill out and attach Schedule B to their tax returns. They may also have to fill out and attach Form 8938, Statement of Foreign Financial Assets.

That has been in effect for awhile now, but new this year is the reporting requirement imposed on foreign financial institutions. Be aware that a lot more information is likely to be coming to the Internal Revenue Service from foreign firms about U.S. account holders, so it’s best to report voluntarily before the IRS finds you.

Tax Breaks

Another new twist for 2014 is the uncertainty surrounding $85 billion worth of temporary tax breaks for individuals and businesses, also called extenders, that expired on Dec. 31, 2013.

In years past, Congress has reinstated those credits retroactively in the final weeks of the year, sometimes even waiting until January of the following year. And, indeed, there is a Senate bill aimed at doing just that.

That bill is now stalled until after the November congressional elections, leaving millions of taxpayers in limbo.

It seems every couple of years, we face this situation, and Congress eventually extends [temporary credits], but that may not happen until after the midterm election—or at all.

Among the expired tax breaks are the commuter subsidy for riding mass transit, which fell to $130 from $245; the 10 percent tax credit for building an energy-efficient home and purchasing energy-efficient appliances; and a $250 deduction for teachers who pay out of pocket for classroom expenses.

Gone, too, is the above-the-line deduction—meaning you need not itemize to claim it—for qualified higher-education expenses, often referred to as the tuition and fees deduction. The tax break allowed taxpayers with modified adjusted gross income of $80,000 or less ($160,000 for joint filers) to claim up to $4,000 of their own qualified tuition and related expenses, or the tuition of a spouse or dependent.

One of the most far-reaching extenders to expire, however, is the state and local general sales-tax deduction. Taxpayers who itemize have previously been permitted to subtract either their state income tax or their state sales tax in calculating their federal taxable income, but the sales-tax deduction was never made permanent.

Its expiration, along with the 54 other tax breaks this year, means those who live in states with no state income tax, like Texas and Florida, have neither write-off available.

More than 8 million taxpayers claimed the deduction for state and local general sales taxes in 2012.

Retirees should also be warned that one of the most popular ways to donate to charity—donating directly from their individual retirement accounts, thereby reducing their tax burden—will be lost if the extender bill is not approved.

Taxpayers who are 70½ or older will no longer be permitted to exclude up to $100,000 per year from gross income by donating directly from their IRAs, or count that qualified charitable distribution as their required minimum distributions.

Lastly, tax relief for homeowners who are underwater on their loan, meaning their house is worth less than they owe on their mortgage, has also disappeared.

Those still struggling in the wake of the housing crisis will no longer be able to write off up to $2 million of any portion of their mortgage debt that gets forgiven by their bank. That amount will instead be treated as taxable income.

Taxpayers this year should be prepared to disclose on their federal tax form whether they obtained qualified health insurance coverage and accurately report any foreign income they received. They should also brace themselves for the possible loss of 55 tax breaks that may hit close to home.

The Ten Biggest Financial Mistakes People Make

Most financial planners agree about the ten most common financial planning errors people make.  Here’s the list.

  1. Failing to plan retirement financing.
  2. Failing to carry an “umbrella” policy to protect against risks not covered in other policies.
  3. Investing too much in one stock, usually the employer’s stock.
  4. No disability insurance or too little disability insurance.
  5. Holding investments which are not productive.
  6. No will or an outdated will.
  7. Failing to use a short term trust to save taxes.
  8. Investing in unwise or unnecessary tax shelters.
  9. Relying on variable income to meet fixed expenses.
  10. Failing to coordinate estate planning with personal financial planning.

Casualty and Disaster Losses

Generally, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return.  You may not deduct casualty losses covered by insurance unless you file a timely claim for reimbursement, and you reduce the loss by the amount of any reimbursement or expected reimbursement.

A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, car accident, earthquake or even volcanic eruption.  A casualty does NOT include normal wear and tear or progressive deterioration.

To deduct a casualty loss, you must be able to show that:

  • There was a casualty loss, by stating the type of casualty (car accident, fire, flood)
  • That the loss was a direct result of the casualty
  • That you are the owner of the property or contractually liable to the owner for the damage.
  • Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.

If your property is personal-use property or is not completely destroyed, the amount of your casualty loss is the lesser of:

  • The adjusted basis of your property before the loss, or
  • The decrease in fair market value of your property as a result of the casualty

Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. To figure the decrease in FMV, you generally need a competent appraisal.  However, other measures also can be used to establish certain decreases. The cost of cleaning up or of making repairs after a casualty as a measure can be used as long as repairs have actually been made, are necessary, are to take care of the damage, cost of repairs is not excessive, and the value of the property after repairs is not more than the value of the property before the casualty.  The cost of restoring landscaping to its original condition after a casualty may also indicate the decrease in FMV.  You may be able to measure your loss by what you spend on removing destroyed or damaged tree and shrubs, any measures taken to preserve damaged trees and shrubs, and replanting necessary to restore the property to its approximate value before the casualty.

The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation.  If your property is business or income-producing property, such as rental property, and is completely destroyed, then the amount of your loss is your adjusted basis.

The IRS sets two limits: First, you must reduce your loss amount by $100, and the remainder then must be more than 10 percent of your adjusted gross income.  You also have to subtract any insurance money you received from the loss.

Example:  After collecting from your homeowners insurance, you were out of pocket $6000 in damages from a flood.  You subtract $100 from that $6000 loss, giving you $5900.  Then you subtract 10 percent of your adjusted gross income (AGI), which for our example, let’s say, is $50,000, giving you an amount of $5000.  That leaves you a casualty loss claim on your tax return of $900 ($6000 – $100 – $5000 = $900).

You must itemize your loss deduction, and also have supporting documents to verify your expenses and losses.  Then, you have to figure out the “real money” value of your deduction.  Deductions don’t directly translate into tax dollars saved, so a casualty deduction of $5000 won’t get you a five-grand refund.  Rather, deductions reduce your taxable income.  The less taxable income you have, the smaller your tax bill.  After you determine your casualty loss deduction, you must refigure your taxes using the new taxable income amount to see just how much of a refund you’ll get.

When a disaster is so severe that it’s declared a major disaster area by the president, you get additional choices.  For more information call our office at 734-464-3660.

Enrolled Senate Bill No. 934

ESB 934
STATE OF MICHIGAN
97TH LEGISLATURE
REGULAR SESSION OF 2014
Introduced by Senator Richardville

ENROLLED SENATE BILL No.934

AN ACT to fix minimum wages for employees within this state; to prohibit wage discrimination; to provide for a wage deviation board; to provide for the administration and enforcement of this act; to prescribe penalties for the violation of this act; and to repeal acts and parts of acts.

The People of the State of Michigan enact:
Sec. 1. This act shall be known and may be cited as the “workforce opportunity wage act”.

Sec. 2. As used in this act:
(a) “Commissioner” means the director of the department of licensing and regulatory affairs.
(b) “Employ” means to engage, suffer, or permit to work.
(c) “Employee” means an individual not less than 16 years of age employed by an employer on the premises of the employer or at a fixed site designated by the employer, and includes a minor employed subject to section 15(1) of the youth employment standards act, 1978 PA 90, MCL 409.115.
(d) “Employer” means a person, firm, or corporation, including the state and its political subdivisions, agencies, and instrumentalities, and a person acting in the interest of the employer, who employs 2 or more employees at any 1 time within a calendar year. An employer is subject to this act during the remainder of that calendar year.

Sec. 3. An employer shall not pay any employee at a rate that is less than prescribed in this act.

Sec. 4. (1) Subject to the exceptions specified in this act, the minimum hourly wage rate is:
(a) Before September 1, 2014, $7.40.
(b) Beginning September 1, 2014, $8.15.
(c) Beginning January 1, 2016, $8.50.
(d) Beginning January 1, 2017, $8.90.
(e) Beginning January 1, 2018, $9.25.

(2) Every January beginning in January 2019, the state treasurer shall adjust the minimum wage by an amount determined by the state treasurer at the end of the preceding calendar year to reflect the average annual percentage change in the consumer price index for the most recent 5-year period for which data are available. As used in this subsection, “consumer price index” means the most comprehensive index of consumer prices available for the midwest region from the bureau of labor statistics of the United States department of labor. The wage and hours division of the department of licensing and regulatory affairs shall post the adjusted minimum wage on its website by February 1 of the year it is calculated, and the adjusted rate is effective beginning April 1 of that year. An annual increase under this subsection shall not exceed 3.5%.

(3) An increase in the minimum hourly wage rate as prescribed in subsection (2) does not take effect if the unemployment rate determined by the bureau of labor statistics, United States department of labor, for this state is 8.5% or greater for the year preceding the year of the prescribed increase. Sec. 4a. (1) Except as otherwise provided in this act, an employee shall receive compensation at not less than 1-1/2times the regular rate at which the employee is employed for employment in a workweek in excess of 40 hours.

(2) This state or a political subdivision, agency, or instrumentality of this state does not violate subsection (1) with respect to the employment of an employee in fire protection activities or an employee in law enforcement activities, including security personnel in correctional institutions, if any of the following apply:
(a) In a work period of 28 consecutive days, the employee receives for tours of duty, which in the aggregate exceed
216 hours, compensation for those hours in excess of 216 at a rate not less than 1-1/2 times the regular rate at which the employee is employed. The employee’s regular rate shall be not less than the statutory minimum hourly rate.

(b) For an employee to whom a work period of at least 7 but less than 28 days applies, in the employee’s work period the employee receives for tours of duty, which in the aggregate exceed a number of hours which bears the same ratio
to the number of consecutive days in the employee’s work period as 216 bears to 28 days, compensation for those excess hours at a rate not less than 1-1/2 times the regular rate at which the employee is employed. The employee’s regular rate shall be not less than the statutory minimum hourly rate.

(c) If an employee engaged in fire protection activities would receive overtime payments under this act solely as a result of that employee’s trading of time with another employee pursuant to a voluntary trading time arrangement, overtime, if any, shall be paid to employees who participate in the trading of time as if the time trade had not occurred.
As used in this subdivision, “trading time arrangement” means a practice under which employees of a fire department voluntarily substitute for one another to allow an employee to attend to personal matters, if the practice is neither for the convenience of the employer nor because of the employer’s operations.

(3) This state or a political subdivision, agency, or instrumentality of this state engaged in the operation of a hospital or an
establishment that is an institution primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who reside on the premises does not violate subsection (1) if both of the following conditions are met:
(a) Pursuant to a written agreement or written employment policy arrived at between the employer and the employee before performance of the work, a work period of 14 consecutive days is accepted instead of the workweek of 7 consecutive days for purposes of overtime computation.

(b) For the employee’s employment in excess of 8 hours in a workday and in excess of 80 hours in the 14-day period, the employee receives compensation at a rate of 1-1/2 times the regular rate, which shall be not less than the statutory minimum hourly rate at which the employee is employed.

(4) Subsections (1), (2), and (3) do not apply to any of the following:
(a) An employee employed in a bona fide executive, administrative, or professional capacity, including an employee employed in the capacity of academic administrative personnel or teacher in an elementary or secondary school.
However, an employee of a retail or service establishment is not excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in the employee’s workweek that the employee devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40% of the employee’s hours in the workweek are devoted to those activities.

(b) An individual who holds a public elective office.

(c) A political appointee of a person holding public elective office or a political appointee of a public body, if the political appointee described in this subdivision is not covered by a civil service system.

(d) An employee employed by an establishment that is an amusement or recreational establishment, if the establishment does not operate for more than 7 months in a calendar year.
(e) An employee employed in agriculture, including farming in all its branches, which among other things includes: cultivating and tilling soil; dairying; producing, cultivating, growing, and harvesting agricultural or horticultural commodities; raising livestock, bees, fur-bearing animals, or poultry; and a practice, including forestry or lumbering operations, performed by a farmer or on a farm as an incident to or in conjunction with farming operations, including preparation for market, delivery to storage, or delivery to market or to a carrier for transportation to market or processing or preserving perishable farm products.

(f) An employee who is not subject to the minimum hourly wage provisions of this act.

(5) The director of the department of licensing and regulatory affairs shall promulgate rules under the administrative procedures
act of 1969, 1969 PA 306, MCL 24.201 to 24.328, to define the terms used in subsection (4).

(6) For purposes of administration and enforcement, an amount owing to an employee that is withheld in violation of this section
is unpaid minimum wages under this act.

(7) The legislature shall annually appropriate from the general fund to each political subdivision affected by subsection (2) an
amount equal to the difference in direct labor costs before and after the effective date of this act arising from any change in existing law that results from the enactment of subsection (2) and incurred by the political subdivision.

(8) In lieu of monetary overtime compensation, an employee subject to this act may receive compensatory time off at a rate that
is not less than 1-1/2 hours for each hour of employment for which overtime compensation is required under this act, subject to all of the following:

(a) The employer must allow employees a total of at least 10 days of leave per year without loss of pay and must provide the compensatory time to the employee under either of the following:
(i) Applicable provisions of a collective bargaining agreement, memorandum of understanding, or any other written agreement between the employer and representative of the employee.

(ii) If employees are not represented by a collective bargaining agent or other representative designated by the employee, a plan adopted by the employer and provided in writing to its employees that provides employees with a voluntary option to receive compensatory time off for overtime work when there is an express, voluntary written request to the employer by an individual employee for compensatory time off in lieu of overtime pay before the performance of any overtime assignment.

(b) The employee has not earned compensatory time in excess of the applicable limit prescribed by subdivision (d).

(c) The employee is not required as a condition of employment to accept or request compensatory time. An employer shall not directly or indirectly intimidate, threaten, or coerce or attempt to intimidate, threaten, or coerce an employee for the purpose of interfering with the employee’s rights under this section to request or not request compensatory time off in lieu of payment of overtime compensation for overtime hours, or requiring an employee to use compensatory time. In assigning overtime hours, an employer shall not discriminate among employees based upon an employee’s choice to request or not request compensatory time off in lieu of overtime compensation. An employer who violates this subsection is subject to a civil fine of not more than $1,000.00.

(d) An employee may not accrue more than a total of 240 hours of compensatory time. An employer shall do both of the following:
(I) Maintain in an employee’s pay record a statement of compensatory time earned by that employee in the pay period that the pay record identifies.

(ii) Provide an employee with a record of compensatory time earned by or paid to the employee in a statement of earnings for the period in which the compensatory time is earned or paid.

(e) Upon the request of an employee who has earned compensatory time, the employer shall, within 30 days following the request, provide monetary compensation for that compensatory time at a rate not less than the regular rate earned by the employee at the time the employee performed the overtime work.

(f) An employee who has earned compensatory time authorized under this subsection shall, upon the voluntary or involuntary termination of employment or upon expiration of this subsection, be paid unused compensatory time at a rate of compensation not less than the regular rate earned by the employee at the time the employee performed the overtime work. A terminated employee’s receipt of or eligibility to receive monetary compensation for earned compensatory time shall not be used by either of the following:

(i) The employer to oppose an employee’s application for unemployment compensation under the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.1 to 421.75.

(ii) The state to deny unemployment compensation or diminish an employee’s entitlement to unemployment compensation benefits under the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.1 to 421.75.

(g) An employee shall be permitted to use any compensatory time accrued under this subsection for any reason unless use of the compensatory time for the period requested will unduly disrupt the operations of the employer.

(h) Unless prohibited by a collective bargaining agreement, an employer may terminate a compensatory time plan upon not less than 60 days’ notice to employees.

(1)As used in this subsection:
(i) “Compensatory time” and “compensatory time off” mean hours during which an employee is not working and for which the employee is compensated in accordance with this subsection in lieu of monetary overtime compensation.

(ii) “Overtime assignment” means an assignment of hours for which overtime compensation is required under this act.

(iii) “Overtime compensation” means the compensation required under this section.

Sec. 4b. (1) An employer may pay a new employee who is less than 20 years of age a training hourly wage of $4.25 for the first 90 days of that employee’s employment. The hourly wage authorized under this subsection is in lieu of the minimum hourly wage otherwise prescribed by this act.

(2) Except as provided in subsection (1), the minimum hourly wage for an employee who is less than 18 years of age is 85% of the general minimum hourly wage established in section 4.

(4) A person who violates subsection (3) is subject to a civil fine of not more than $1,000.00.

Sec. 4c. On petition of a party in interest or on his or her own initiative, the commissioner shall establish a suitable scale of rates for apprentices, learners, and persons with physical or mental disabilities who are clearly unable to meet normal production standards. The rates established under this section may be less than the regular minimum wage rate for workers who are experienced and who are not disabled.

Sec. 4d. (1) Before September 1, 2014, the minimum hourly wage rate is $2.65 per hour and, beginning September 1, 2014, the minimum hourly wage rate is 38% of the minimum hourly wage rate established in section 4 if all of the following occur:
(a) The employee receives gratuities in the course of his or her employment.

(b) If the gratuities described in subdivision (a) plus the minimum hourly wage rate under this subsection do not equal or exceed the minimum hourly wage otherwise established under section 4, the employer pays any shortfall to the employee.

(c) The gratuities are proven gratuities as indicated by the employee’s declaration for purposes of the federal insurance contributions act, 26 USC 3101 to 3128.

(d) The employee was informed by the employer of the provisions of this section.

(2) As used in this section, “gratuities” means tips or voluntary monetary contributions received by an employee from a guest, patron, or customer for services rendered to that guest, patron, or customer and that the employee reports to the employer for purposes of the federal insurance contributions act, 26 USC 3101 to 3128.

Sec. 5. (1) The governor shall appoint, with the advice and consent of the senate, a wage deviation board composed of 3 representatives of the employers, 3 representatives of the employees, and 3 persons representing the public. One of the 3 persons representing the public shall be designated as chairperson. Members shall serve for terms of 3 years, except that of the members first appointed, 1 from each group shall be appointed for 1 year, 1 for 2 years, and 1 for 3 years. The commissioner shall be secretary of the wage deviation board.

(2) A majority of the members of the board constitute a quorum, and the recommendation or report of the board requires a vote of not less than a majority of its members. The business which the wage deviation board may perform shall be conducted at a public meeting of the board held in compliance with the open meetings act, 1976 PA 267,
MCL15.261 to 15.275. Public notice of the time, date, and place of the meeting shall be given in the manner required by that act.

(3) A writing prepared, owned, used, in the possession of, or retained by the wage deviation board in the performance of an official function shall be made available to the public in compliance with the freedom of information act, 1976
PA442, MCL 15.231 to 15.246.

(4) The per diem compensation of the board and the schedule for reimbursement of expenses shall be established annually by the legislature.

(5) The wage deviation board may request data of any employer, subject to the provisions of this act, as to the wages paid and hours worked by the employer’s employees and may hold hearings as necessary in the process of obtaining this information.

(6) The wage deviation board shall submit its report to the commissioner, who shall file it in his or her office as a public record together with the regulations established by the board.

(7) At any time after a deviated wage rate has been in effect for 6 months or more, the wage deviation board may reconsider the rate.

Sec. 6. The commissioner may promulgate rules necessary for administration of this act under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

Sec. 7. An employer who is subject to this act or any regulation or order issued under this act shall furnish each employee with a statement of the hours worked by the employee and of the wages paid to the employee, listing deductions made each pay period. The employer shall furnish the commissioner, upon demand, a sworn statement of the wage information. These records shall be open to inspection by the commissioner, his or her deputy, or any authorized agent of the department at any reasonable time. An employer subject to this act or any regulation or order issued under this act shall keep a copy of this act and regulations and orders promulgated under this act posted in a conspicuous place in the workplace that is accessible to employees. The commissioner shall furnish copies of this act and the regulations and orders to employers without charge.

Sec. 8. The commissioner shall administer and enforce this act and, at the request of the wage deviation board, may investigate and ascertain the wages of employees of an employer subject to this act. The commissioner and the commissioner’s employees shall not reveal facts or information obtained in the course of official duties, except as when required by law, to report upon or take official action or testify in proceedings regarding the affairs of an employer subject to this act.

Sec. 9.
(1) If an employer violates this act, the employee affected by the violation, at any time within 3 years, may do any of the following:
(a) Bring a civil action for the recovery of the difference between the amount paid and the amount that, but for the violation, would have been paid the employee under this act and an equal additional amount as liquidated damages together with costs and reasonable attorney fees as are allowed by the court.

(b) File a claim with the commissioner who shall investigate the claim.

(2) If the commissioner determines there is reasonable cause to believe that the employer has violated this act and the commissioner is subsequently unable to obtain voluntary compliance by the employer within a reasonable period of time, the commissioner shall bring a civil action under subsection (1)(a). The commissioner may investigate and file a civil action under subsection (1)(a) on behalf of all employees of that employer who are similarly situated at the same work site and who have not brought a civil action under subsection (1)(a). A contract or agreement between the employer and the employee or any acceptance of a lesser wage by the employee is not a bar to the action.

(3) In addition to bearing liability for civil remedies described in this section, an employer who fails to pay the minimum hourly wage in violation of this act, or who violates a provision of section 4a governing an employee’s compensatory time, is subject to a civil fine of not more than $1,000.00.

Sec. 10.
(1) This act does not apply to an employer that is subject to the minimum wage provisions of the fair labor standards act of 1938, 29 USC 201 to 219, unless those federal minimum wage provisions would result in a lower minimum hourly wage than provided in this act. Each of the following exceptions applies to an employer who is subject
to this act only by application of this subsection:
(a) Section 4a does not apply.

(b) This act does not apply to an employee who is exempt from the minimum wage requirements of the fair labor standards act of 1938, 29 USC 201 to 219.

(2) Notwithstanding subsection (1), an employee shall be paid in accordance with the minimum wage and overtime compensation requirements of sections 4 and 4a if the employee meets either of the following conditions:
(a) He or she is employed in domestic service employment to provide companionship services as defined in 29 CFR 552.6 for individuals who, because of age or infirmity, are unable to care for themselves and is not a live-in domestic service employee as described in 29 CFR 552.102.

(b) He or she is employed to provide child care, but is not a live-in domestic service employee as described in 29 CFR 552.102. However, the requirements of sections 4 and 4a do not apply if the employee meets all of the following conditions:
(i) He or she is under the age of 18.
(ii) He or she provides services on a casual basis as defined in 29 CFR 552.5.
(iii) He or she provides services that do not regularly exceed 20 hours per week, in the aggregate.

(3) This act does not apply to persons employed in summer camps for not more than 4 months or to employees who are covered under section 14 of the fair labor standards act of 1938, 29 USC 214.

(4) This act does not apply to agricultural fruit growers, pickle growers and tomato growers, or other agricultural employers who traditionally contract for harvesting on a piecework basis, as to those employees used for harvesting, until the board has acquired sufficient data to determine an adequate basis to establish a scale of piecework and determines a scale equivalent to the prevailing minimum wage for that employment. The piece rate scale shall be equivalent to the minimum hourly wage in that, if the payment by unit of production is applied to a worker of average ability and diligence in harvesting a particular commodity, he or she receives an amount not less than the hourly minimum wage.

(5) Notwithstanding any other provision of this act, subsection (1)(a) and (b) and subsection (2) do not deprive an employee or any class of employees of any right that existed on September 30, 2006 to receive overtime compensation or to be paid the minimum wage.
Sec. 11. An employer that discharges or in any other manner discriminates against an employee because the employee has served or is about to serve on the wage deviation board or has testified or is about to testify before the board, or because the employer believes that the employee may serve on the board or may testify before the board or in any investigation under this act, and any person who violates any provision of this act or of any regulation or order issued under this act, is guilty of a misdemeanor.

Sec. 12. Any employer that consistently discharges employees within 10 weeks of their employment and replaces the discharged employees without work stoppage is presumed to have discharged them to evade payment of the wage rates established in this act and is guilty of a misdemeanor.

Sec. 13.
(1) An employer having employees subject to this act shall not discriminate between employees within an establishment on the basis of sex by paying wages to employees in the establishment at a rate less than the rate at which the employer pays wages to employees of the opposite sex for equal work on jobs, the performance of which requires equal skill, effort, and responsibility and that is performed under similar working conditions, except if the payment is made under 1 or more of the following:
(a) A seniority system.
(b) A merit system.
(c) A system that measures earnings by quantity or quality of production.
(d) A differential based on a factor other than sex.

(2) An employer that is paying a wage differential in violation of this section shall not reduce the wage rate of an employee to comply with this section.

(3) For purposes of administration and enforcement, any amount owing to an employee that has been withheld in violation of this section is considered unpaid minimum wages under this act.
Sec. 14. An employer operating a massage establishment as defined in section 2 of former 1974 PA 251 that violates
this act is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $1,000.00, or both.

Enacting section 1. The minimum wage law of 1964, 1964 PA 154, MCL 408.381 to 408.398, is repealed.
This act is ordered to take immediate effect.
Secretary of the Senate
Clerk of the House of Representatives
Approved
Governor

 

What is the Michigan Minimum Wage?

Michigan’s Workforce Opportunity Wage Act, Public Act 138 of 2014

Michigan’s Minimum Wage:

Effective May 27, 2014, Public Act 138 of 2014, the Workforce Opportunity Wage Act, repealed and replaced Public Act 154 of 1964, as amended, the Minimum Wage Law.

Tipped employees may be paid $2.65 per hour May 27, 2014 through August 31, 2014; effective September 1, 2014, tipped employees may be paid 38% of the Section 4 Minimum Hourly Wage Rate.  If the gratuities plus the tipped employee minimum hourly wage rate under subsection 4d do not equal or exceed the minimum hourly wage otherwise established under section 4, the employer pays any shortfall to the employee.

A training wage of $4.25 per hour may be paid to employees 16-19 years of age for the first 90 days of their employment.

Minors 16-17 years of age may be paid 85% of the minimum hourly wage rate.

The rates are as follows:

 Effective Date Minimum
Hourly
Wage Rate
 Tipped        Employee
Hourly Wage Rate
85% of Minimum
Hourly Wage Rate
 Before September 1, 2014 $7.40 $2.65 $7.25*
September 1, 2014 $8.15 $3.10 $7.25*
 January 1, 2016 $8.50 $3.23 $7.25*
 January 1, 2017 $8.90  $3.38 $7.57
 January 1, 2018 $9.25  $3.52 $7.86

*The state 85% rate of $6.29 per hour from 5/27/2014 through 8/31/2014, and the $6.93 from 9/1/2014 through 1/1/2016, and the $7.23 from 1/1/2016 through 1/1/2017; is lower than the federal minimum wage of $7.25. Section 10(1) of Public Act 138 of 2014, as amended, states: “. . . This act does not apply to an employer that is subject to the minimum wage provisions of the fair labor standards act of 1938, 29 USC 201 to 219, unless those federal minimum wage provisions would result in a lower minimum hourly wage than provided in this act..”

Call us at 734-464-3660 for questions regarding Michigan’s Minimum Wage.