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FIRPTA Withholding Tax Increases

By:  Amanda Wilson

The Foreign Investment in Real Property Tax Act (FIRPTA) subjects foreign sellers to U.S. tax when they sell their interest in real property located in the U.S., including interests in companies that predominately hold real estate.  To accomplish this, the purchasers generally are required to withhold 10% of the gross sales price when the seller is foreign.  Legislation that was passed at the end of last year (the PATH Act) increases this withholding rate from 10% to 15% effective as of February 16, 2016.  If you are purchasing a U.S. real estate interest from a foreign seller, make sure you are aware of this change and adequately withhold.  If you fail to do so, you may find yourself liable for the extra withholding. read more

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IRA $100,000 Charitable Withdrawal through 12/31/14

By:  Julie Frey.

If you are chairtably inclined and wish to use some of your IRA to fund your charitable donations, the Senate has just passed an extension of some “tax extenders” that were in place in 2013.  It is anticipated that President Obama will sign the bill in the next few days.  What does this mean for you?  It means that if you are 70 1/2 years of age or older you can take up to $100,000 in tax-free distributions from your IRA in 2014 provided that the funds withdrawn are given to an eligible public charity.  While one cannot also take a deduction for that contribution, the money won’t count as income.  Once President Obama signs the bill into law, you will only have a few weeks to act, so contact your advisors now to alert them to your intention to make the withdraw and charitable contribution.  The ability to do this ends on December 31, 2014. read more

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Give to your charity of choice or the IRS

By:  Julia Frey.  The income tax bill for 2013 may be a rude awakening for many people. Even if you had the same amount of income in 2013 as you did in 2012, your tax bill WILL increase and may increase by a significant amount; some pundits opine a minimum of 7%. Remember, that income taxes can go up to 39.6% and capital gains taxes have increased for high income wage earners. There may also be an additional 3.8% Medicare tax on investment income. Itemized deductions have also been reduced for high income earners. read more