Attention foreign investors in US real property! FIRPTA changes are coming

Few days ago Senate Finance Committee approved a Bill that would modify the FIRPTA – Foreign Investment in Real Property Tax Act. The affected foreign investors are primarily the shareholders of REIT – Real Estate Investment Trusts, however, the changes would also encompass other foreign investors in US real property.

Among other things the Bill if enacted would increase the FIRPA withholding tax under IRC 1445 from 10% to 15%. It would also impose additional reporting requirements than those exist now. For example, real estate brokers may also have a reporting requirements when they sell property owned by foreign investors!

It is important to monitor the development as it would significantly increase the burden on the withholding agents and buyers of the properties.

We at CPA Global Tax & Accounting are monitoring the developments and will post an update as soon as the Bill is finalized in its present form or with any changes. Please contact us (info@cpaglobaltax.com) if you need additional information about the provisions of the Bill.

Important News from IRS

American Opportunity Tax Credit not available to students on F1 visas

The American Opportunity Tax Credit is available to help eligible students and their parents offset the cost of higher education by reducing the amount of the federal income tax they owe. If they don’t owe tax, the AOTC could result in a refund.

If a student is in the United States on an F1 Student Visa, the student would generally be considered a nonresident alien for federal tax purposes. A student who is a nonresident alien for any part of the tax year is not eligible and cannot claim the AOTC unless the student elects to be treated as a resident alien for federal tax purposes.

To learn more about resident and nonresident alien status and restrictions on claiming the education credits, read American Opportunity Tax Credit – Information for Foreign Students.

Now you can find your Social Security 1099 or 1042S online

If you receive Social Security benefits but did not receive or misplaced either form SSA-1099 or SSA-1042S, you may now view, print or replace the form online by creating a Social Security account.

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Form 3115 not mandatory for small taxpayers IRS says in IR-2015-29

The Internal Revenue Service today made it easier for small business owners to comply with the final tangible property regulations.

Requested by many small businesses and tax professionals, the simplified procedure is available beginning with the 2014 return taxpayers are filling out this tax season. The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014.

Also, the IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014.

“We are pleased to be able to offer this relief to small business owners and their tax preparers in time for them to take advantage of it on their 2014 return,” said IRS Commissioner John Koskinen. “We carefully reviewed the comments we received and especially appreciate the valuable feedback provided by the professional tax community on this issue.”