Personal Wealth Opportunities Under the New Tax Laws: A Canon Capital Wealth Management Financial Literacy Seminar

Many are wondering how the new tax laws will affect them in the short and long-term. Our Wealth Management unit dedicated the first Financial Literacy seminar of the year to the topic, with our managing director of Wealth Management, Dr. Peter Roland, providing an overview of what to expect and how best to prepare.

In addition to the overview we’ll present in this blog post, you may view the full webinar here. You may download the presentation to follow along, take notes, and note any questions.

The official name for the bill that passed in December 2017 is “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” Not very catchy, Congress has dubbed it the “Tax Cuts and Jobs Act.” No matter the name, what this bill was designed to do is lower general tax rates, while also making changes to the deductions and exemptions many have grown accustomed to. With that, this bill creates “winners,” “losers,” and considerations and opportunities for both short and long-term wealth management.

Changes in Tax Rates and Deductions/Exemptions

With this new plan, individual tax rates have dropped, meaning many are seeing more money in their paychecks. At the same time, the standard deduction amounts have nearly doubled. However, this can lead to an issue at tax time for taxpayers with large itemized deductions and personal exemptions. Their tax liability may go up even though the rate at which they are being taxed is lower. To make sure you’re not headed for a surprise when your 2018 taxes are being prepared, do what we call a “Paycheck Check-up”. Use the withholding calculator provided by the IRS to make sure enough money is being withheld from your pay.

Among the changes in itemized deductions in the Tax Cuts and Jobs Act:

  • Medical expenses for 2018 and 2019 are now deductible in excess of 7.5% of adjusted gross income (AGI). Before it was in excess of 10% of your AGI.
  • Deduction for State, Local, and Real Estate taxes (SALT) is limited to $10,000.
  • Deduction for Mortgage Interest Qualified Acquisition Debt reduced from $1,000,000 to $750,000 for first or one second home.
  • Home Equity Loans other than the amount used to acquire or improve the home are no longer deductible.
  • Charitable contributions can now offset 60% of AGI (was 50%).
  • Casualty losses eliminated except for federally-declared disaster areas.
  • Miscellaneous Itemized Deductions eliminated (unreimbursed employee business expenses, investment fees, tax prep fees).
  • Personal Exemptions have been eliminated (was $4,050 per Exemption in 2017).
  • Higher exemptions for Alternative Minimum Tax.
  • Alimony is not taxable by recipient (or deductible by payor) for new agreements after 12/31/2018.
  • Homeowners gain exclusion ($250,000/$500,000) now requires that the homeowner must live in the residence five of the prior eight years as opposed to two of the prior five years.

This new law has also affected credits and deductions related to child care and college savings:

  • Child Care Credit increased from $1,000 to $2,000.
  • Section 529 Education Plans allowed to distribute up to $10,000 for elementary, secondary, and certain home school expenses.
  • Investment income of child now taxed at higher trust tax rates vs. individual tax rates.

Estate & Gift Taxation as changed as follows:

  • Federal exemption of estate tax is now $11.2 million per person (to be adjusted for inflation).
  • Higher Annual Gift Tax exemption amount of $15,000 (raised from $14,000).

Business owners will see a reduction in tax rates as well:

  • Regular “C” Corporation: highest tax rate reduced from 35% to 21%
  • Higher Section 179 depreciation deduction limits
  • New deductions for 20% of qualified business net income from passthrough entities (S Corporations, Partnerships, LLC’s, Sole Proprietorships).
  • Income limits for 20% benefit – $157,500 and $315,000 taxpayer income.
  • 20% deduction of income from REIT dividends, Master Limited Partnership dividends, and Co-ops.
  • Real Estate now counts as a qualified business.

Truc Alert

A “Truc” is not some advanced financial term. It’s the word our local Pennsylvania Dutch use for “trick.” Under this new tax law, even though for many the tax rate will go down, the amount of tax owed will increase. In addition:

  • These reduced tax rates and standard deduction changes for individuals will sunset, aka disappear, in 2025.
  • Those beneficial provisions will be disappearing on a now-expanded income base.
  • The new IRS inflation factor calculation for brackets modified are now using “Chained CPI,” resulting in higher taxes over time as a result of “taxflation.”

Strategies

How can you make the best of the advantages and disadvantages of this new tax law? In addition to the “Paycheck Check-up” we recommended earlier, you might also consider:

  • Take advantage of “Tax Arbitrage” when possible.
  • Use donor-advised funds to “bunch” charitable contributions, using appreciated assets when possible.
  • Look at your “bucket list,” the funds you choose to be taxed now, taxed later, and never taxed (i.e., Roth IRA).
  • Review Roth IRA opportunities
  • Consider real estate investments to enjoy the 20% deduction of net income from investment real estate activity. This is especially key as many will opt to rent over buying a home with the loss of the itemized deduction benefit.
  • Evaluate your personal debt and consider paying off non-deductible home equity loans more quickly that are no longer subject to interest deductibility.
  • Plan for and use the 20% deduction against “Qualified Business Income” and evaluate your business structure for new rules.
  • Make optimal use of “portability” election in estates to maximize the exemption available to surviving spouse, not forgetting about step up in tax basis for assets flowing through estates. Also consider State inheritance taxes in your planning.

We’ve included a lot of information in this blog post. Take about 45 minutes of your time, watch the webinar, and please let us know if we can help with any questions you might have regarding this or any other financial services matter. Contact us online or call 215-723-4881.

Canon Capital Wealth Management Announces Financial Literacy Seminar

Canon Capital Wealth Management is pleased to announce the first in a series of free educational seminars to be held throughout the 2016 calendar year. The seminars will cover personal finance and business related topics to help you become more financially literate.

The first Financial Literacy Seminar will be held at our Hatfield office Wednesday, March 23, 2016. For your convenience, we are offering this seminar at 3:00-4:00pm or 5:00-6:00pm.

This Financial Literacy Seminar is for adults of all ages with any level of financial knowledge. It’s ideal for individuals desiring to improve their ability to manage their financial resources effectively to meet their goals and gain a lifetime of financial security.

During this seminar, you’ll learn:

– The significance of financial literacy in your daily life.
– Tools and techniques to better understand and apply financial literacy concepts.
– How you can help yourself and others to become more financially literate.

The seminar will be presented by Dr. Peter Roland, Managing Director of Canon Capital. Dr. Roland brings over 25 years of experience teaching finance and accounting in the graduate MBA program at DeSales University.

We hope you’ll join us for this educational and fun event so please feel free to bring a friend. RSVP by Thursday, March 17, 2016 to Jen Norman. You may RSVP via email (jnorman@canoncapital.com) or call 215-723-4881, ext. 207. Please include whether you would like to attend the 3:00pm or 5:00pm session.

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions. For more information, visit www.canoncapital.com or call 215-723-4881.

Canon Capital Wealth Management Kicks Off Financial Literacy Initiative

Results from a recent Global Literacy Test show that only 57% of adults in the United States are financially literate. What does this mean? It means that nearly half of the U.S. population does not have the complete understanding of the tools and abilities needed to best manage their personal finances.

It is with this literacy ratio in mind that our Wealth Management division kicked off a new Financial Literacy Initiative. The first seminar was presented by Dr. Peter Roland, Managing Director of Canon Capital, on Wednesday, March 23 at our Hatfield location. This personal financial literacy seminar is the first of several educational seminars that will be offered free of charge to both Canon Capital clients and the public throughout the 2016 calendar year.

20160423-DSC 1647med

“For many people, personal finance management can be overwhelming. It’s not that people aren’t smart enough, it’s that many people feel they don’t have the time to devote to it so they put it off. We believe that with the knowledge and tools presented in these seminars, people will be able to use their time more efficiently and therefore be more eager and better prepared to take a good look at their personal finances. When we all are able to make good decisions everyone benefits,” said Dr. Roland.

20160423-DSC 1660med

This Financial Literacy Initiative is for adults of all ages with any level of financial knowledge who are eager to improve their ability to manage their financial resources effectively to meet their goals and gain a lifetime of financial security.

We want to hear from you. What topics would you like to see covered in our Financial Literacy Initiative? Please let us know in the comments.

You can listen to the March 23rd seminar via this webinar replay.

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions. For more information, call 215-723-4881 or browse our website.

20160423-DSC 1645med

Canon Capital Wealth Management Continues Financial Literacy Seminars with “Financial Self-Defense” May 19, 2016

Financial fraud is on the rise. According to the Federal Trade Commission’s annual report, Identity theft incidents alone increased 47% in 2015.

Learn how to steer clear of financial fraud at the second in our series of Financial Literacy Seminars: Financial Self-Defense. During our time together we’ll help you improve your ability to spot the warning signs of financial fraud by sharing:

– How to identify common situations where consumers might be victimized
– Case studies of consumer financial abuse
– Ways you can protect yourself from financial fraud or abuse

The Financial Self-Defense Seminar will be held at our Hatfield office Thursday, May 19, 2016. For your convenience, we are offering this seminar at 3:00-4:00pm or 5:30-6:30pm.

20160423-DSC 1660med

We expect this seminar will be both educational and eye-opening, so please feel free to bring a friend, relative or colleague. Please RSVP by Friday, May 13, 2016 to Jen Norman. You may RSVP via email or call 215-723-4881, ext. 207 to let us know whether you would like to attend the 3:00pm or 5:30pm session.

Our Financial Literacy Seminars are for adults of all ages with any level of financial knowledge. They’re ideal for individuals desiring to improve their ability to manage their financial resources effectively to meet their goals and gain a lifetime of financial security.

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions. For more information, visit www.canoncapital.com or call 215-723-4881.

Staying on the Cutting Edge: Canon Capital Wealth Management in the Classroom

 

 

Notice anyone familiar in this commercial from DeSales University? That’s right, our own Dr. Peter Roland is among the instructors included in this 30-second spot currently airing in the Delaware and Lehigh Valleys. In addition to Dr. Roland’s role as Managing Director here at Canon Capital, he has been teaching finance and accounting at DeSales University’s graduate MBA program for 25 years.

In order to serve our clients well, we believe it’s essential to stay on the forefront of the issues and developments in wealth management. Teaching is one of the most natural ways to accomplish this. We take seriously the trust you place in us and work to share our knowledge, whether in client consultation, teaching a college course or through our recently-launched Financial Literacy Initiative (The Kick-off Session can be accessed here.).

Canon Capital Management Group provides a single source of financial and business services to help you make the right decisions. Let us help you today. Visit www.canoncapital.com or call 215-723-4881.

Financial Self-Defense – Avoiding IRS Scams

During the recent Financial Self-Defense seminar presented by our Wealth Management division, we focused on the three main areas of financial fraud: preying on senior citizens, tax-related fraud, and general financial fraud.

With tax-related fraud, the most prevalent attempt comes from people or entities who call on the phone to try and fool you into thinking they are the IRS and that you owe them money. The IRS does not operate that way. In fact, here are six things the IRS will never do.

 

FinancialFraudRecap 2

 

Six Things the IRS Will Never Do

#1. Call to demand immediate payments over the phone, nor will the agency call about taxes owed without first having mailed you several bills.

#2. Call or email you to verify your identity by asking for personal and financial information.

#3. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

#4. Require you to use a specific payment method for your taxes, such as a prepaid debit card.

#5. Ask for credit or debit card numbers over the phone or email.

#6. Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for non-payment.

If you think you might have experienced this type of fraud and have questions, let us help you determine next steps. Learn more at www.canoncapital.com or call 215-723-4881.

Top Ten Red Flags of Financial Fraud

The recap of our recent “Financial Self-Defense” seminar concludes with a general overview of the red flags to be wary of when dealing with a financial advisor. You always have the right to pursue a second opinion and to take the time to think things over.

Top Ten Red Flags of Financial Fraud

#1. “We’ve known him forever. I’m sure you can trust him.”
This is the “friends and family” prospects model. Your friend’s nephew is just starting out at a financial firm. Do you mind if he meets with you? It’s not impolite to decline such a meeting or, if you agree, do your homework. Make sure this person is someone you truly would trust with your finances.

#2. “Just sign here. I’ll take care of the rest.”
Never leave blanks on your signed financial paperwork. It might be tempting but be present for the completion of your paperwork.

#3. “This is just for my special clients.”
Beware any offer labeled as “private” or “exclusive.” It rarely is. Ask whether your investments are regulated or supervised by independent third parties.

#4. “I’ll send you all of the investment reports.”
Make sure you receive reports from your advisor and the independent third party custodian of your accounts. Those reports should match.

#5. “Make the check payable to me.”
Your check should be made payable to the custodial entity. Never give a financial professional a blank check, no matter how trusted your relationship.

CCMG FinancialSelfDefense May2016

#6. “I know it’s a difficult time, but you need to decide now.”
Take your time. If you’ve inherited some money, it’s recommended to take up to one year to decide how to manage these funds. Feel free to bring a trusted friend along to your appointment. Trust, but verify.

#7. “This one’s a no-brainer. You can’t lose.”
There’s prudence in financial management, but nothing is certain. Take your time. Get a second opinion. It’s your money.

#8. “This offer is only good today.”
Pressure selling is a common practice in the brokerage world. If anyone tries to force you into a decision using this tactic, steer clear.

#9. “I can replace that with something better.”
Understand how a financial professional earns their pay. Before agreeing to any transaction, carefully consider the charges you’ll incur and the timing involved.

#10. “It’s very complicated. No need to bother you with all the details.”
Don’t buy what you can’t understand. Make sure the advisor explains everything about your investments.

In addition to avoiding all of these red flags, it’s a good idea to designate a trusted friend or relative to handle your investments should something happen to you.

If you have questions about your investments or would like a second opinion, we’re happy to help. Contact us online or call 215-723-4881.

 

Miss the first two Financial Self-Defense: Financial Fraud Recaps? Read them now:

Financial Self-Defense: Avoiding IRS Scams

Financial Self-Defense for Senior Citizens

 

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.