The One Constant Thing in Life is in Fact “CHANGE” Itself:

With the 2012 year-end coming up fast, and the automatic expiration of many of the existing tax laws and lower tax rates that have been in effect for over a decade approaching just as fast…”change” and the uncertainty of the vacuum of information about the new tax laws and rates do not make it any easier to try to know what one should do in the face of such changes.

For this reason, this year it is more important than ever to attempt to plan ahead  – because of the new recent and sometimes “over-used”  – yet having serious tax implications “Fiscal Cliff.”

While no one at this point knows for sure what new tax laws and reforms are in store for 2013, there has been “talk” and some expected changes you may want to address before year-end – to see if there are any steps you may want or need  to take or opportunities to explore – before year-end 2012.

One thing is certain, there are substantial changes in the tax code which may require changes to long-time benefits you have enjoyed causing higher taxes, stepped up tax enforcement, or changes to the taxation of and  tax treatment of certain items such as distributions from pass-through entities and additonal new surtaxes on passive (investment) income.

There are also some new tax forms and reporting and increased disclosure requirements applicable for foreign bank accounts for business entities for 2012 – which started for individuals in 2011 and carry penalties starting at $10K as well as possible criminal penalties.

For some of the Fiscal Cliff planning and the expected possible increase to the capital gains rates…while no one has a crystal ball and can predict what is going to happen – there are some possible “protective steps” which can be possibly used for this year – BEFORE YEAR-END – such as taking a look at your Investment Holdings OUTSIDE your retirement account – to see if there are investments that have gone up in value as well to look if any have gone down in value (ie. they are at a loss compared to how much you paid for them originally.)  It is important to note that these gains and losses are “on paper” only and are UNREALIZED – which means they do not affect you for tax purposes – since they have not been ACTUALLY SOLD yet.

Normally, around year-end, you would only be looking for securities to sell at a LOSS to offset any gains you may have recognized by selling securities outside your retirement plans that went up in value since you purchased them…which is generally always a good step to take.

However, for the upcoming year-end 2012 – you may want to consider and talk with both your investment advisors as well as your tax professional (it is important to seek help from a credentialed tax professional such as a Certified Public Accountant.)   This may involve looking at your portfolio with your investment advisor before year-end to identify appreciated investments that can be sold at a gain and bought back to get a new cost basis –  which now will be  “RECOGNIZED” and are sales which must be reported for tax purposes – but only if those sales can be equally offset with actual sales of securities at a loss.

There is a generally a limit on security sales called “Wash Sale Rules” that only apply to sales of securities at a loss when you cannot buy them back again within 30 days or it erases the loss.  However, this rule does not apply currently to sales of securities at a gain – that you later buy back before 30 days.  This is not something possibly to do without help and guidance of an investment and/or tax professional.   This may not be applicable to for everyone’s individual set of circumstances and be applicable in every case.  In other words…”Kids don’t try this at home!”  

The office of David L Wrubel, CPA, PA can be of assistance in this capacity of assisting you along with your investment advisor to explore opportunities you may want to consider implementing before any year-end.

Should you have questions or need Business or Individual Tax Advice, or help with FIRPTA:

Our firm may be contacted at: 

PHONE:  (305) 672-4272  [4CPA]

E-MAIL:  DAVID@CPA-FL.COM   

WEBSITE:  WWW.CPA-FL.COM

FOLLOW US ON TWITTER: @MiamiBeachCPA

FIRPTA COMPLIANCE – Are you a Realtor or Real Estate Attorney who has US Non-resident Foreign-National Clients? 

Do you need help with the FIRPTA Tax Form 8288-B Early Tax Withholding Exemption Certificate Application as well as help with the accompanying Form W-7 ITIN or EIN Application for an International Taxpayer Identification Number for the Seller or buyer in the transaction?

Then this article may provide a general overview of important tax-related matters and tips to keep in mind – which may help keep you and your clients from having a costly tax and penalty bill from the IRS!

We will go over some basics on how to not only just comply with FIRPTA rules, avoid holdups in closings, but also to look like a superstar to those involved in the transactions – by identifying in advance how and when to advise your clients to get the right tax advice from a competent tax professional.

For starters, you might ask yourself – What exactly is FIRPTA?

FIRPTA stands for the Foreign Investment in Real Property Tax Act of 1980.

According to the FIRPTA Rules –  if a person is a US Non-Resident Foreigner and disposes of an interest in U.S. real property, that transaction (and the parties to the transaction) are subject to FIRPTA tax withholding.

This tax law is very complex in scope and language.

The mere ‘disposition’ of real property by a foreign person can trigger the withholding tax of 10%  (and newer applicable 15% rate for transactions over $1 million per the 2015 PATH Tax Act!)

It is important to note that per the IRS Tax Laws a disposition is defined as not only a sale or exchange of real property – but it can also be applicable to gifts and transfers of such property.

The tax act puts a duty for a tax withholding of 10% tax  (and newer applicable 15% rate for transactions over $1 million per the 2015 PATH Tax Act) on the net proceeds on the purchaser(s), sellers, real estate agents and escrow agents such as the title company or law firm performing the closing.

When a foreign corporation is the party transferring the real property, then the required withholding tax applicable can be 35% of the net gain on the transfer – and not the commonly perceived 10% (and newer applicable 15% rate for transactions over $1 million per the 2015 PATH Tax Act)

There are several other scenarios described in the tax code and often no two transactions are exactly the same in how these laws apply -based on the specifics facts and circumstances.  This is why getting the right help from a competent tax professional is crucial!

The good news is that there are some exceptions provided for the FIRPTA withholding tax applicable – however it is important to note that these are not all automatically applicable.  Often, an Early Withholding Exemption Application must be filed with the IRS in advance of a real estate closing – in order to obtain a written determination of the actual withholding tax or exemption applicable to the transaction.

The IRS also requires that the parties to the transaction listed on the application or remittance forms have a US Taxpayer Identification Number such as a Social Security Number, Employer Identification Number, or in the case of a individual US Non-Resident – an International Taxpayer Identification Number – also known as an ITIN.

If one of the parties to the transaction listed on the remittance or withholding exemption application forms do not already have a US Taxpayer Identification Number – it would be advisable that a completed application such as a Form W-7 for an individual or a Form SS-4 for a corporate or LLC type entity be attached to the package filed.

This may help avoid the filing get rejected by the IRS or the funds remitted from getting potentially literally lost in limbo in the IRS system making crediting them to the seller nearly impossible to be possibly later claimed back as a refund – as applicable.

Also important to note is that If the IRS deems you are a responsible party for the FIRTPA withholding tax and you neglect to do so, you may be held liable for the tax!

If there is a moral to this story – it would be that if you are a realtor, purchaser, or real estate attorney who represents a foreign non-resident person, foreign entity or even a U.S. entity which is owned by a foreign person it is critical that you insist that the purchaser or seller seek the advice and formally engage a Certified Public Accountant or Tax Attorney to advise how the FIRPTA laws may apply to their particular situation.  The office of David L Wrubel, CPA, PA can be of assistance in this capacity.

Should you have questions or need Business or Individual tax advice, out firm is available via phone at (305) 672-4272  [4CPA]   – as well as via e-mail at DAVID@CPA-FL.COM.  Our Firm Website is WWW.CPA-FL.COM

Are you a Victim of ID Theft or Know someone who is a victim of ID Theft? 

Did you go to file your personal  tax return  and found out that someone already filed a tax return for you under your Social Security Number or Tax ID Number?  Want to know how do you fix this?

Some Initial Steps may Include (but not limited to):

• Place a “Fraud Alert” on your credit reports with the three major credit bureaus, and review the reports carefully.
• Contact the security or fraud departments of each company where an account was opened or charged without your okay.
• File a police report. File a report with law enforcement officials to help you correct your credit report and deal with creditors who may want proof of the crime.
• Report the theft to the Federal Trade Commission.
• Contact the Social Security Administration at 1-800-722-1213
• And possibly most important is to Call the IRS Identity Theft Unit 1-800-908-4490 and file the applicable forms with the IRS to report the ID theft – and get proper help for this from a Certified Public Accountant, Attorney or Enrolled Agent.

Please be careful when considering using seemingly “low-cost” tax preparation locations, a “friend of a friend”  preparers – who may  illegally sell or use your private identity information for their own fraudulent financial gain. 

It can cost you a lot more in then the end vs using someone such as a Certified Public Accountant or Tax Attorney should your Identity be compromised ! 

Please take caution with your Identity information and that of your family and loved ones! 

The office of David L Wrubel, CPA, PA can be of assistance in the  capacity of preparing your taxes in a professional manner and assisting you with the IRS reporting should you become a victim of Identity theft.

Should you have questions or need Business or Individual Tax Advice, or help with FIRPTA:

Our firm may be contacted at: 

PHONE:  (305) 672-4272  [4CPA]

E-MAIL:  DAVID@CPA-FL.COM   

WEBSITE:  WWW.CPA-FL.COM

FOLLOW US ON TWITTER: @MiamiBeachCPA

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Visit the following link at the IRS for the direct scoop on the Top Ten Tips Every Taxpayer Should Know About ID Theft: http://www.irs.gov/newsroom/article/0,,id=252507,00.html

Download the Step-by-Step Guide from the Federal Trade commission for when you are a victim of ID Theft:

http://www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt04.pdf

Read the full story in the Miami Herald by Jay Weaver  12/3/11 at the following Link:

http://www.miamiherald.com/2011/12/01/2530435/miami-shores-couples-frustrating.html

HOW DO I GET STARTED AND WHERE DO I BEGIN FOR SMALL BUSINESS TAX RETURN PREPARATION? …

Don’t wait to the Last minute!

The 2011 tax year Personal tax returns are due April 17th this year.  However, if you have certain types of small businesses, such as an S-Corporation or even a Regular C-Corporation Type entity, the filing deadline for most calendar-year corporation tax returns is March 15th of each year.

It is important to note, that for certain types of business entities, such as S-Corporations and Limited Liability Corporations (“LLC”s) – since these are generally taxed as “pass-through type entities,” and the net taxable income or loss passes through to and is used in the tax calculation of the owners’ personal tax return,…the tax returns for these types of entities must be completed before the personal tax return of the owners’ !!

So, if you started a company during last year, and you are used to waiting until April to get your tax return done – you may be pushing the envelope as far as the deadlines to get both the business and personal tax returns done in time for the April personal filing deadline.

Worse, you may even miss the company tax return filing deadline should it be March 15th and risk penalties – or not leave enough time to finish both the LLC and the Personal Tax Return by the mid-April filing deadline!

It is important to realize that when you have a business, there may be other applicable earlier and more frequent interim Federal, State & Local tax form and tax filing deadlines compared to when you were just only filing a personal tax return before as an employee of someone else!

If you do in fact run out of time, you can perhaps file an extension.  However, remember that an extension is generally only an extension of time to file, not to pay the taxes.  Most Federal and State business and personal tax extensions require you to calculate and/or estimate as accurately as possible the amount of taxes due to be paid by the deadline and to pay that along with the extension – even if the forms are filed later – or you can risk incurring substantial penalties and interest.

With the right pre-planning and professional tax guidance form a certified tax professional, you can strive to be ahead of the game going forward…instead of behind the eight-ball!

Should you have questions or need Business or Individual Tax Advice, or help with FIRPTA:

Our firm may be contacted at: 

PHONE:  (305) 672-4272  [4CPA]

E-MAIL:  DAVID@CPA-FL.COM   

WEBSITE:  WWW.CPA-FL.COM

FOLLOW US ON TWITTER: @MiamiBeachCPA

Read about this topic and the full story by Joyce Rosenberg of the Associated Press 1/27/12 as reported on Yahoo News on Yahoo.com:

http://sg.news.yahoo.com/getting-started-small-business-tax-return-220446527.html

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