2019 IRS Standard Mileage Rates on the Rise

As you keep records for the 2019 tax year, we want to make sure you are aware of this year’s IRS standard mileage rates. As of January 1, 2019, the standard mileage rates for the use of a vehicle (car, van, pick-up truck, or panel truck) for business, charitable, medical, or moving purposes are:

  • 58 cents for every mile of business travel driven (an increase of 3.5 cents from the 2018 rate)
  • 20 cents per mile driven for medical or moving purposes (an increase of 2 cents from the 2018 rate)
  • 14 cents per mile driven in service of charitable organizations (no change from the 2018 rate)

If you rely on mileage deductions for tax filing, save time and stress by considering the many apps and online mileage trackers we discuss in this blog.

If you have questions about this topic or any of our other business service offerings, please don’t hesitate to call 215-723-4881 or contact us online.

Canon Capital Wealth Management Named Ascensus Signature Elite Advisor

We are honored to announce that Canon Capital Wealth Management’s investment advisory team has been named a Signature Elite Advisor in the Ascensus Elite Advisor program for 2019. The Elite Advisor program is an exclusive experience provided to financial advisors with demonstrated, results-oriented experience in the retirement industry.

“As a Signature Elite advisor, our clients will benefit from dedicated access to the Ascensus award-winning retirement plan service team,” states Patty Webb, Canon Capital partner, and Director of Wealth Management Services. “I’m proud that we have been recognized by an organization that helps millions of Americans make the dream of a stress-free retirement a reality, and I look forward to our continued partnership in serving the retirement planning needs of local small business owners and their employees.”

Ascensus is the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. The firm delivers technology and expertise to help millions of people save for what matters most: retirement, education, and healthcare. Ascensus partners closely with financial advisors across the nation to ensure that business owners and their employees have the technology and guidance they need to invest for their future retirement.

“We truly value our relationships with these key partners and remain committed to giving them the attention and dedication they deserve,” states Jason Crane, head of retirement sales at Ascensus. “As a result, we want to recognize Canon Capital Wealth Management’s achievement as an outstanding financial advisor with a higher level of service, attention, and opportunity.”

Here at Canon Capital, our Wealth Management investment advisors take the time to learn about your unique financial and investment needs. We then develop a comprehensive service plan that acutely reflects those needs. Our combination of process, service, and client communication provides you with clear expectations and the confidence of knowing that in us, you have a trusted advisor.

For more information on how we might be of service, please contact us or call 215-723-4881.

Tax Cuts and Jobs Act: Opportunities for Tax Beneficial Wealth and Retirement Planning

We continue our blog series recapping our recent presentation on the new tax laws to the Indian Valley Chamber of Commerce. This blog discusses opportunities for tax beneficial wealth and retirement planning.

Tax years 2018 to 2025 (the year many of the changes within the Tax Cuts and Jobs Act are set to expire) brings many changes in the status quo to the individual taxpayer, including:

  • Brackets expanded and tax rates are lowered
  • Capital Gains tax rate changes
  • Standard Deduction increase
  • State and Local Tax limitation (capped at $10,000)
  • Mortgage Interest Deduction limitations (Home Equity interest no longer deductible)
  • Elimination of miscellaneous Itemized Deductions
  • Suspension of Personal Exemptions
  • Child Tax Credit expanded
  • Significant impact on AMT

At first glance, the lowering of the overall tax rate and the increase in the standard deduction looks like good news to most taxpayers. However, not necessarily so when placed alongside the loss of personal exemptions, miscellaneous itemized deductions, home equity interested deductions, and the rest of the negative impact items listed above.

These changes do present four opportunities to create long-term strategies to help build wealth as well as plan for retirement:

“Play” the Tax Brackets and Standard Deduction

For 2018, the standard deduction is now $24,000. If you’re over 65, it is $26,600. One avenue to get the most out of this scenario is to stagger the taxable year of deduction timing given this higher standard deduction.

Let’s look at charitable giving. In years past, your donations would be included amongst your itemized deductions. Now, you might consider frontloading your giving at a higher amount into a Donor Advised Fund. So, if you normally donate $5,000 each year, consider placing $25,000 now into a Donor Advised Fund – this places you above the $24,000 threshold of the standard deduction. Then, over the course of five years, give the annual gift of $5,000 from that Donor Advised Fund. This allows you to get the full advantage of the standard deduction in one tax year, followed by several tax years of maximizing itemized deductions.

Portfolio Rebalancing / Tax Loss Harvesting / Capital Gain Harvesting

Take advantage of stock market downturns and volatility by rebalancing to a formal investment allocation. The more volatile things are, the better the portfolio rebalancing works. Studies show a .75% higher return when rebalancing to a formal investment allocation.

Tax loss harvesting comes into play when the market goes down, allowing you to generate a tax loss. You can still reinvest in a similar fund and enjoy the benefits of that investment.

With historically low Capital Gains rates, take advantage of a zero tax rate Capital Gains situation. It might be an ideal time to sell certain assets, pay zero tax, and reinvest.

Dynamic Asset Location Optimization

Where are you placing your wealth as you go through life?

  • Tax Deferred: IRA, 401(k), 403(b)
  • Taxable: Investment Accounts, Bank Accounts
  • Tax Free: Roth IRA, Roth 401(k)

And, when you retire, from where will you draw this wealth? Think about an asset allocation mix between these three wealth locations.

Roth 401k & IRA

Use this 2018-2025 window of low tax rates to your advantage, with a tax-free Roth 401(k) or IRA. Consider converting 100% of your IRA to a Roth account to allow for “back door” (long-term) Roth IRA contributions in the future or convert smaller amounts over several years.

If you have any questions or concerns about these changes, please call us at 215-723-4881. You may also consult our free online 2018-19 Tax Planning, which can be found here.

To view the portions of his seminar that were broadcast via Facebook Live, please visit our Facebook page.

Tax Cuts and Jobs Act: Changes to Business Taxes

We continue our blog series recapping our recent presentation on the new tax laws to the Indian Valley Chamber of Commerce. This blog covers changes made to business tax laws.

One of the advantageous aspects of this new tax law is that the government has provided a clear definition of what constitutes a “small business.” A “small business” is defined as a company with average gross receipts for the past three years of $25 million or less.

This means that businesses meeting the definition of a small business can now avail themselves of these aspects of the tax law:

  • Expanded ability of cash method: This means that If you have been operating on the accrual method and consistently have higher receivables than payables, you can elect to switch to the cash method, allowing for potential consistent deferment of income.
  • Inventory tracking requirements: This allows you to elect to treat your inventory as non-incidental materials and supplies (items you expense when used or consumed). However, under the non-incidental materials and supplies category there is another election called the de minimis safe harbor election, which allows you to expense, safely and without fear of audit, anything under $2500 or less. So, if you have inventory that qualifies as non-incidental materials and supplies, and the unit cost of each item is $2500 or less, you can potentially write off your entire inventory for this year, presuming the inventory is under a year old. For example, if you are the owner of a junkyard business and have $400,000 in inventory, if you did not pay over $2500 per car, you can make these elections and have a $400,000 expense.
  • Section 263A threshold raised: This was a tax requiring that you had to capitalize indirect costs, just for tax. This is gone

Other changes include:

  • C-corporate rate is a flat 21%
  • Entertainment no longer deductible: Meals, however, are another story. Technically, right now, according to the law meals are not deductible, but in October 2018 the IRS put out a guidance that they are deductible because there was a mistake in the writing of the law. This is likely one of the technical directions that will eventually be passed by Congress. Until then, we can rely on the IRS guidance.
  • Interest deductions limited: If your gross receipts are over $25 million, your interest deductions are limited to 30% of your taxable income and any unused portion will get carried forward.
  •  Business losses, no carryback and limited to 80% of income
  • Like-Kind Exchanges now only qualify on real estate
  • Technical terminations of partnerships are eliminated

Business Change Highlights – Depreciation

Changes were also made on depreciation. Here are the highlights:

  • Additional first-year/bonus depreciation: 100% for property acquired after 9/27/17
  • Bonus now allowed for new and used property: it used to be allowed only for new property
  • Bonus on qualified improvement property no longer qualifies as written. This is another item needing correction, but the IRS has not provided any guidance to date.
  • Bonus phase-down schedule for years after 2022
  • Luxury auto limits (note that the additional $8k depreciation has been extended for 2017)
  • Increased to Sec. 179 ($1M and threshold $2.5M)
  • SUV limitation remains at $25,000
  • 179 limits are indexed for inflation
  • 179 expansion for certain real property (HVAC, roofs)
  • 179 allows for residential rental property improvements

New Employer Credit

There is a new employer credit for paid family and medical leave. This is a general business credit that employers can claim based on wages paid to qualified employees while on leave, subject to conditions.

Planning Opportunities

Please keep in mind, these tax changes are set to expire at the end of 2025. There are a number of potential savings opportunities within these tax law changes. We recommend that businesses evaluate their tax structure and engage in multi-year tax planning.

If you have any questions or concerns about these changes, please call us at 215-723-4881. You may also consult our free online 2018-19 Tax Planning, which can be found here.

To view the portions of his seminar that were broadcast via Facebook Live, please visit our Facebook page.

Tax Cuts and Jobs Act: What’s New and How Will It Affect Your 2018 Tax Return?

We recently had the pleasure of presenting a seminar on the effect of the Tax Cuts and Jobs Acts on businesses and individuals. This is the first in a series of blog posts highlighting the information covered.

While we were all focused on the changes that were coming courtesy of the new Tax Cuts and Jobs Act, a number of additional tax law revisions took effect. The following is a brief recap.

Partnership Audit Regime Laws – Federal Law

Starting January 1, 2018, this Federal Law allows tax to now be accessed at the partnership level. While this is an administrative win, it comes with hidden ramifications to the taxpayer:

  • Assessed at the highest individual rate of tax – which is currently 37%
  • The 20% 199A (flow-through) deduction is no longer applicable
  • Current partners can be assessed for deficiencies from the year prior.

As a result, we recommend that all partnerships evaluate your partnership agreements.

1099 Withholding and Filing Requirements – State (Pennsylvania) Law

These requirements also went into effect on January 1, 2018.

The 1099 Withholding Requirement means you must engage in withholding on Pennsylvania-sourced non-employee compensation to non-residents. This includes business income and leases of real estate. This withholding is currently on a volunteer basis if the entity receiving payment is receiving $5,000 or less per year.

The new filing requirements state that starting in 2018, 1099s and W2s are required to be filed electronically if you are filing 10 or more forms. However, the Pennsylvania Department of Revenue is granting a waiver for the 2018 filing period. Learn more about this requirement in one of our previous blog posts.

Wayfair Decision Affecting Revenue from Online Sources

The Wayfair Decision brings economic nexus to online transactions. “Physical nexus” is when the consumer is making a purchase from a store or transacting with a business with a physical location. With the growth of online shopping, many B2C and B2B transactions take place with companies who do not have a physical presence in Pennsylvania, but their product is coming into Pennsylvania. With the Wayfair Decision, if you are a Pennsylvania-based business conducting online sales with people or companies outside of Pennsylvania, you may have multi-state filing requirements. Most states have differing thresholds, so if you are selling one or two items in a year and do not reach their particular threshold, you would not be required to file.

As always, if you have any questions or concerns regarding these changes, please call us at 215-723-4881. You may also consult our free online 2018-19 Tax Planning, which can be found here.

To view the portions of his seminar that were broadcast via Facebook Live, please visit our Facebook page.

Pennsylvania Department of Revenue Issues News Electronic Filing Requirement

The Pennsylvania Department of Revenue recently changed the electronic filing requirement threshold for W-2 forms. Employers who file 10 or more W-2 forms with the department are now required to file those forms electronically.

This change is in effect for Tax Year 2018 filings. Employers should visit e-TIDES, the department’s online system for business taxes to file the Annual Withholding Reconciliation Statement (REV-1667), which had a deadline of January 31, 2019. Copies of the individual wage withholding statement (W-2) must also be filed electronically with the form REV-1667. The department will grant a waiver for the 2018 tax-filing season with regard to the electronic filing requirement, but it is encouraging employers to take advantage of this option, which is quick, easy and secure.

This change is part of a larger effort to embrace technology to serve taxpayers better and update departmental operations. The department gains many efficiencies in processing by shifting from paper to electronic records.

To this point, the department continues to receive a large number of W-2 records via fax and on compact discs. It takes significant information technology resources to transfer these records into the department’s computer systems manually. Also, if an employer submits paper W-2s, the department must use an entirely manual process to key the taxpayer’s information into its systems, slowing processing times and increasing the potential for error.

The move toward more electronic filing also helps the department increase the security of taxpayer data and safeguard against tax refund fraud. The change is also in line with other electronic filing requirements the department has implemented for other returns and informational statements.

If you have any questions regarding the electronic filing, please visit the Department’s Business Taxes e-Services Center or call 717-787-7635.

If you have additional questions where we might be of service, please call 215-723-4881 or contact us online.

New W-4 Form for 2019

The IRS has issued the new W-4 form for 2019. This is an ideal time to do a Paycheck Check-up, to ensure you’re having the right amount of funds withheld each pay period.

If you have any questions about your specific situation, please consult with your tax advisor. If you do not currently have a tax advisor, we welcome the opportunity to serve you. Please call 215-723-4881 or contact us online.

“Starting Your Own Business” Class with Brent Thompson, CPA CMA CGMA

Are you thinking of starting your own business? Then plan on attending the aptly-named “Starting Your Own Business” class presented by Canon Capital’s Brent Thompson as part of the Souderton Area School District’s Community Education program.

This four-hour class takes place in two, two-hour sessions 7:00 – 9:00 p.m. on Tuesday, February 26 and Thursday, February 28, 2019.

During the class, Brent will cover:

  • Business entity structures and the advantages, disadvantages, and tax ramifications of each.
  • Concepts to help your new venture be more successful.
  • An overview of financing, accounting, insurance, titled assets, home office deductions, auto mileage rules, buy/sell agreements, and more.

Bring any questions you might have to class. Cost is $30.00. Register with SACE online (from the left sidebar of the page select “Evening School,” “Life Planning & Organizing,” and then “Starting a Business.”). View the full program catalog here (Please note, the catalog shows this class as happening in two separate, two-hour sessions. It is one full course presented in the four hours of the two evening sessions.)

Canon Capital is Open for Business in Our New Harleysville Office

We are settling in at our new office, located at 484 Harleysville Pike, Harleysville, PA 19438.  We are awaiting final signage and landscaping. In the meantime, please use the photo in this blog and the directions below to help you travel to our new location. Please note: the main entrance is on the side of the building; not the street-facing entrance.

Directions from Routes 113 & 63

  • Head southwest on Route 113 South (heading toward Lederach/Skippack)
  • Continue on Route 113 South, passing the Harleysville Post Office on your right.
  • Follow Route 113 around the bend and our new office will be on your left.

Directions from Routes 113 & 73

  • Head northeast on Route 113 North (heading toward Harleysville/Souderton)
  • Continue on Route 113 North, through the five points intersection in Lederach
  • Follow Route 113 North; shortly after passing Cheswyck Drive on your right, our building will be on the right.

We look forward to your first visit to our new space, with all four of our business units — CPA, Payroll, Technologies, and Wealth Management — waiting to serve you.

Moving Day is Here: Canon Capital is Moving to New Harleysville Location

Moving Day has arrived! Please note the following regarding our access and availability January 23-28, 2019 as we move our Hatfield and Souderton offices to our new Harleysville location:

Wealth Management
The Wealth Management office is currently in the process of moving. Staff will be accessible via phone and email.

Accounting, Payroll, & Technologies
These business units will begin moving Thursday, January 24. The Souderton office will be accessible until the end of business on Thursday, January 24. Staff will be accessible via phone and email.

There may be delays in communication during this time as we transition to the new location. We are planning that Monday, January 28, 2019 will be our first official day of business in our new location:

484 Harleysville Pike
Harleysville, PA 19438
Click for directions.

Our telephone number (215-723-4881) remains the same.

Thank you.