Posts | Canon Capital Management Group, LLC

The Microsoft Windows 10 Free Upgrade Offer Ends July 29 – Should You Do It?

It’s hard to believe it’s almost a year since Microsoft released Windows 10, the latest version of their Windows operating system. Existing Windows users have the opportunity to access a free upgrade through July 29, 2016. So, should you upgrade? If you have already upgraded and things are going well, then by all means stay with it. If you have not upgraded yet, we do not recommend a rush to do so.

The features of Windows 10 are mostly cosmetic, and we’ve yet to see the major software suppliers release new products not compatible with Windows 7 and 8. Even QuickBooks 2016 – the only version of QuickBooks compatible with Windows 10 – is also compatible with Windows 7 and 8. So as long as your primary software continues to support Windows 7 and 8, we don’t recommend upgrading to Windows 10 on an existing computer.

An operating system upgrade is never as easy as just pushing a button. You need to make sure all of your hardware, software and peripheral equipment is compatible with the new operating system. Will your QuickBooks work? Will you still be able to print? Multiply this by the number and variety of computers in your workplace and what seemed a simple task can be a daunting project.

Be prepared by being proactive.

What we do recommend is that you start preparing now for the day you’ll need to replace your computers, s since Windows 10 will be the standard on any new machines. This includes staying up to date with all software packages and apps while using Windows 7 or 8. Doing so provides better support and more security.

We also suggest scheduling our Computer Solutions’ upfront analysis service which reviews your hardware, software, and equipment to determine what, if any, work is needed before a transition to Windows 10. This allows you to take your time and know what to expect when you eventually move on from Windows 7 or 8 to Windows 10. It’s part of our due diligence and saves you the inconvenience and cost of future unknowns.

We’ve conducted this upfront analysis for a number of clients who have chosen to upgrade to Windows 10 and found that even with no predetermined issues, there were some hiccups once the transition to Windows 10 was complete.

There’s another element to the free Windows 10 upgrade. Some users have experienced an automatic update. Others have made the upgrade accidentally due to the way Windows has presented the option in pop-up messages. If this is the case in your situation, Windows 10 does have an uninstall option allowing you to revert to your previous operating system as long as you do so within 30 days of the Windows 10 installation.

If you have questions or would like to schedule an upfront analysis to be prepared for Windows 10, we are always available to you at 215-723-4881 or www.canoncapital.com.

Four Little Words Cost My Client over $55,000

“Details matter.” That’s what a client recently said as I was handing her a series of amended tax returns for 2014 and 2015 which included around $18,000 in additional taxes owed. Add to that a projection of an additional $37,000 owed for 2016. Why? Four words. Four little words cost my client over $55,000 in unexpected taxes, and I am helpless to do anything about it at this point.

“Details matter.” How simple, yet how profound.

The four words? “Tenants-by-the-entireties.” What does that even mean?

My client’s husband had 50/50 ownership of several rental properties with an unrelated partner. My client’s husband began to have failing health and passed away in 2014. Before his passing, they approached a lawyer to provide some estate planning.

Fortunately, the lawyer established an estate where shares of the partnership would be passed to the children and heirs. This not only kept the partnership from terminating upon my client’s husband’s death but it also meant the partnership was no longer a 50/50 split. Simply put, you need two people for a partnership. If one passes away, the partnership no longer has two individuals and therefore can’t exist. So the lawyer adequately addressed one concern by passing the partnership on to the children and heirs. However, he also did something else that he probably shouldn’t have done. He admitted the wife into the partnership as “tenants-by-the-entireties.” Those four words – “tenants by the entireties” – cost my client about $55,000.

When my client’s husband passed away, the partnership interest (aka ownership) would have automatically gone to his surviving spouse. The fair market value of the partnership interest would have passed through his estate, and his wife would have inherited the properties/partnership interest at full fair market value. So if the properties were sold the day after the husband’s passing, the wife wouldn’t pay a penny in federal income tax because it was handled through the estate.

What should have been a simple inheritance was complicated by the lawyer admitting the wife to the partnership, creating a tenancy by the entireties. From a tax perspective, she then owned 50% of her husband’s share and became ineligible to inherit the whole ownership at fair market value. She was only eligible to inherit half of it at fair market value. As a result, she had to pay taxes on her half of her husband’s share.

Communication is Key

While this is a very complicated area of tax law, the point of the story is this: Whether you have a multi-million-dollar business or as little as two rental properties, make sure your team is in communication with each other. Your accountant, lawyer, insurance agent, investment broker, etc., should all be on the same page. I recommend your accountant should be the “quarterback” guiding the team and identifying the “details” that matter.

It wasn’t until after we drafted the final partnership return in 2016 that we discovered the partnership agreement as it was revised. At that point, there was nothing we could do. While the lawyer did what he did to ease the transfer of ownership, it cost my client approximately $55,000.

Don’t be deceived into thinking this couldn’t happen to you. These particular clients weren’t “big clients with a lot of money.” There were only two rental properties. So please, hear my plea, and that of my clients: “Details matter.”

If you have questions about how your estate planning affects your tax situation, we’d be happy to help. Contact us or call 215-723-4881.

Brent Thompson, CPA has been with Canon Capital since 1998. He provides management advisory services, tax and general business planning, tax preparation, and financial statement preparation and review services for numerous businesses and their owners. He holds the Certified Management Accountant (CMA) designation and a Chartered Global Management Accountant (CGMA) designation. Brent is a member of the AICPA and the Institute of CMA’s.

This article is designed for general information only. The information presented should not be construed to be formal advice nor the formation of a client relationship.

New Payroll Rules and Regulations

Several rules and regulations have recently been passed that will affect payroll. Here is a summary of what to expect.

The Overtime Rule

Final ruling has been passed and will become effective on December 1, 2016. The final rule does not make any changes to the duties test for executive, administrative and professional employees. The final rule will raise the salary threshold indicating eligibility from $455/week to $913/week. Thus, anyone earning hourly wages or a set salary under $47,476 annually will be entitled to overtime pay.

In response to the new overtime rule, employers can:

• Pay time-and-a-half for overtime work
• Raise workers’ salaries above the new threshold
• Limit workers’ hours to 40 per week
• Some combination of the above

For additional information, please review Guidance for Private Employers or Guidance for Non-Profit Employers.

Please consult your HR Specialist to make sure you are in compliance prior to the effective date.

PA Child Support

Previously, employers were permitted to deduct up to 2% of the ordered amount per pay as reimbursement for administrative costs related to withholding support. Effective 8/30/16, employers may deduct a one-time fee of $50 for reimbursement of administrative expenses. The 2% fee is no longer permitted.

Accelerated Form W2/W3 and 1099-MISC Filing Deadlines

Beginning with 2016 forms filed in early 2017, employers are required to file forms W2 and W3, whether filing electronically or on paper, to the Social Security Administration by January 31. Form W2 is still required to be provided to employees by January 31.

The new January 31 deadline also applies to Forms 1099-MISC on which nonemployee compensation is reported in Box 7, even if amounts are also reported in other boxes on the form.

Please don’t hesitate to contact us with any questions. We are happy to help.

Canon Capital Wealth Management Welcomes Bradley Barnhorst, CFA

We are pleased to announce that Bradley Barnhorst, CFA, has joined Canon Capital’s Wealth Management group as Investment Committee Counsel. Brad’s expertise and experience – particularly in the area of investment and portfolio risk and volatility reduction — will enhance our ability to offer favorable investment solutions to our clients.

Before joining Canon Capital, Brad worked on Wall Street as an Associate Director with Bear, Stearns & Co., where he specialized in structured equity products and derivatives geared to mitigating investment risk. He is a recognized expert in investment portfolio risk and volatility reduction, with numerous published works in both scholarly and professional journals.

Brad also serves as the Chair of the Finance Major program for both the undergraduate and graduate divisions at DeSales University, a position he will retain along with his professor duties. Brad’s passion for research has led to the publishing of his finance-related work in both scholarly and professional journals.

Brad holds the Chartered Financial Analyst (CFA) designation and is a member of the CFA Institute, the Northeastern Association of Business, Economics, and Technology (NABET) where he serves on the Executive Board as Recording Secretary and the New York Society of Security Analysts.

Brad earned a Bachelor of Arts in Computer Science from Harvard University and a Master of Business Administration (MBA) with a concentration in Corporate Finance and Investment Management from Penn State University. Brad lives in Bath, PA with his wife and two daughters.

Canon Capital Wealth Management serves individuals, retirement plans, trustees, and institutions. If you or someone you know would like to find out more about the benefits of a relationship with our Wealth Management group, we encourage you to contact us.

New Sales Tax Laws Effective 8/1/16

On July 13, 2016, Governor Tom Wolf signed into law Act 84 of 2016. Per the Pennsylvania Department of Revenue, the following updates have been made to Sales, Use, and Hotel Occupancy taxes:

Timely Filing Vendor Discount
Effective for returns that have a period end date after August 1, 2016, the vendor discount for licensees for timely filed returns and payments is limited to the lesser of $25 or 1 percent of tax collected for a monthly filer, $75 or 1 percent of tax collected for a quarterly filer and $150 or 1 percent of tax collected for a semi-annual filer.

Exemptions
Effective July 1, 2017, property and services directly and predominately used in “timbering” by a company primarily engaged in the business of harvesting trees is exempt from tax. The term shall not include the harvesting of trees for clearing land for access roads.

Effective immediately, licensees are not required to collect tax on corrugated boxes used by a person engaged in the manufacture of snack food products to deliver the manufactured product, whether or not the boxes are returnable.

Effective in 60 days, the sale at retail or use of services related to the setup, tear down, or maintenance of tangible personal property rented by an authority to exhibitors at the Pennsylvania Convention Center and the David L. Lawrence Convention Center is exempt from sales and use tax.

Sales tax base expansion
Effective August 1, 2016, licensees are now required to collect tax on digitally or electronically delivered or streamed video, photographs, books, any other taxable printed material, apps, games, music, any audio service including satellite radio or canned software. These items are taxable whether accessed and purchased singly, or by subscription or in any other manner. Any maintenance, updates or support on these items are taxable.

Taxable sales on these items made on or after August 1, 2016, must be included when filing sales tax returns. The date of sale is the date of the invoice or other similar document.

Sales Suppression
Any person who, for commercial gain, sells, purchases, installs, transfers or possesses in this commonwealth an automated sales suppression device or zapper that the sole purpose of the device is to defeat or evade the determination of sales tax due commits a punishable offense.

Anyone that commits such an offense and is in possession of three or fewer devices will be subject to a fine up-to but not to exceed five thousand dollars ($5,000).

Anyone that commits such an offense and is in possession of three or more devices will be subject to a fine up-to but not to exceed ten thousand dollars ($10,000).

This shall not apply to an entity that possesses an automated sales suppression device for the sole purpose of developing hardware or software to combat the evasion of taxes by use of automated sales suppression devices or zappers or phantomware.

For additional information or if you have any questions regarding this notification, contact the Taxpayer Service and Information Center at 1-717-787-1064, or visit the department’s website at www.revenue.pa.gov, and click on Online Customer Service Center; Service for Taxpayers with Special Hearing and/or Speaking Needs is 1-800-447-3020 (TT only).

Canon Capital Wealth Management Presents: Best Year-End Tax Strategies and Tips – A Financial Literacy Seminar

You are cordially invited to attend our fourth Financial Literacy seminar of the year on Thursday, November 10, 2016, from 3:00 to 4:00 pm eastern time at our Hatfield location. We’ve saved the best for last – this final Financial Literacy seminar of the year will cover Best Year-End Tax Strategies and Tips. This seminar will once again take place at our Hatfield location from 3:00-4:00 pm.

This seminar is geared toward individuals who wish to learn about and make use of tax savings strategies for the current year.

During this seminar, you’ll learn:

• Strategies to minimize taxes for the 2016 calendar year
• Tax law changes affecting 2016 returns
• Possible changes based on political party taxation policies

We expect this event will be both educational and informative so please feel free to bring a relative or friend who might benefit from the topic. Refreshments will be available.

Please RSVP by Monday, November 7, to Jen Norman via email, or by phone at 215-723-4881, ext. 207, to let us know that you would like to attend.

We look forward to seeing you at the event!

Canon Capital Wealth Management Presents: Financial Self-Defense Moves for Your Work Retirement Plan and IRA Assets

We are pleased to announce the third seminar in our series on Financial Literacy, Financial Self-Defense Moves for Your Work Retirement Plan and IRA Assets. Taking place Wednesday, September 21st in our Hatfield location, we are offering two sessions so you may attend at your convenience. The first session will run from 3:00-4:00 pm and the second 7:00-8:00 pm.

You will learn:

• Strategies to maximize your account assets in time for your retirement
• Retirement plan expenses and how excessive fees can eat into your account returns
• Tax implications – whether to use pre-tax or Roth contributions
• Different account features – what they are and tips on how to use them

The information provided in this seminar is based on the recently-published book – Your 401k, The Danger Within – which was co-written by Dr. Peter Roland, Managing Director and one of the founders of Canon Capital, and Roger Levy, CEO of Cambridge Fiduciary Services, LLC. Roger Levy’s name might sound familiar to you because he filed an amicus brief in support of the plaintiff, 401(k) plan participants, in the recent landmark Supreme Court case, Tibble v. Edison International.

This seminar is provided free of charge and is for any individuals desiring to maximize the amounts accumulated in their retirement accounts and also to learn what to look for when reviewing account investments, expenses, and service features.

Our time together will be both educational and informative. Please feel free to bring a relative or friend who might benefit from the topic. Every attendee will receive a free copy of Your 401k, The Danger Within, and Dr. Roland will be happy to sign your copy.

RSVP by Friday, 9/16/2016, to Jen Norman. You may RSVP via email or call 215-723-4881, ext. 207. Please let us know whether you would like to attend the 3:00 pm or 7:00 pm session.

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions.

Congratulations to Barbara “BJ” McNutt on Her Retirement

Congratulations to our friend and colleague, BJ McNutt, who is retiring tomorrow, June 2nd. BJ has been with Canon Capital for 18 years, handling Accounts Payable and firm bookkeeping. She’s looking forward to spending more time on her favorite pasttimes, golfing and skiing! We wish her all the very best as she enters this new chapter of life.

Do You Work in Philadelphia? Paid Sick Leave is Here

If your daily commute involves enduring the Schuylkill Expressway or hopping on Septa Regional Rail to Philadelphia, a city ordinance that took effect in May 2015 applies to you. Although you may live in the suburbs, if you are a full- or part-time employee who works at least 40 hours per year for a Philadelphia business the new “Promoting Healthy Families and Workplaces” ordinance brings you new benefits. What does this mean? Through this legislation, you now accrue one hour of paid sick leave for every 40 hours worked. The maximum for each year is 40 hours.

Most Employers with Less Than 10 Employees May be Exempt from Providing Paid Sick Leave

While this ordinance applies to all employers conducting business within the city of Philadelphia, those with less than 10 employees are required to provide only unpaid sick leave. They are required to do so, however, at the same rate as those businesses providing paid sick leave. The Philadelphia Department of Commerce reports that “certain chain establishments are required to provide paid sick leave regardless of the number of employees at the chain’s Philadelphia location.”

Expansive Coverage But Not All Types of Employees are Eligible

There are a few employment situations where this paid sick leave ordinance will not apply. According to this flyer from the Philadelphia Department of Commerce providing a summary of the legislation, it does not apply to:

Independent Contractors
Seasonal Workers
Adjunct Professors
Employees hired for a term of less than 6 months
Interns
Pool employees
Employees covered by collective bargaining agreements
State and Federal employees

To read the full legislation, click here. We are also happy to guide you through this new ordinance and answer any questions you might have as it relates to your payroll services. Contact us at 215-723-4881 or click here to contact us online.

2011 Tax Planning Guide

As always, the goal of our firm is to help you plan effective tax strategies and save money. To help achieve this goal, we’re pleased to provide you with our 2011 Tax Planning Guide.
Because tax laws change often, understanding the current opportunities and the timeframe available to benefit from them is important. Besides reviewing significant dates for optimal savings, we also offer several ways to help minimize your tax bill.
In addition, we highlight and explain significant tax reform for 2011, which includes the following:

A two-year extension of reduced rates on individual income and dividends/capital gains
The reinstatement of the Federal estate tax
An extension of the marriage penalty relief, education tax breaks, and other tax breaks for families
Enhanced Section 179 expensing amounts and bonus depreciation for businesses
An extension of the Work Opportunity Tax Credit
A new, one-year payroll deduction for employees

Please take a moment to review our 2011 Tax Planning Guide. If you have any questions, feel free to give us a call. For additional information, we invite you to visit our Tax Guide Online website www.taxguideonline.com/canoncapital.
Canon Capital is here to guide you through the tax planning process from start to finish. We hope you will take advantage of our resources to maximize your 2011 tax savings.
P.S. We appreciate referrals. Tell your business associates and friends to call for a free copy of our 2011 Tax Planning Guide.