From the IRS

“It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. Continue reading “Inependent Contractor Resources For Realtors”

On January 18/22, the Treasury Department and the Internal Revenue Service issued their final regulations regarding the new 20 percent deduction on qualified business income created by the 2017 Tax Cuts and Jobs Act. Until the regs were finally published, there had been uncertainty about the interpretation of some provisions.

26 U.S. Code § 199A now permits owners of sole proprietorships, S corporations, or partnerships to deduct up to 20% of their earned business income. The purpose of the provision was to allow small businesses to keep pace with the tax cuts offered to corporations under the Act. Continue reading “Real Estate Professionals and the Qualified Business Income Rule”

By Dani Deahl@danideahl  Jun 21, 2018, 1:21pm EDT

The US Supreme Court has overturned a tax-related ruling from 1992, freeing state and local governments to collect billions in internet sales tax, as reported by Bloomberg. The 1992 ruling from Quill v. North Dakota, focused on mail-order and catalog purchases, requiring that a business must have a physical presence within a state in order for the state to collect sales tax.

The 5-4 vote overturned this ruling, citing companies like Newegg, Wayfair, and Overstock in the Supreme Court decision, stating that “each easily meets the minimum sales or transactions requirement of the Act, but none collects South Dakota sales tax.” Amazon began voluntarily collecting taxes in the 45 states that require it last year, but only on items from its own inventory, meaning sellers on Amazon Marketplace may be impacted by this ruling. [MORE: Go to link  here:]

As most taxpayers know by now, the TCJA reduced the available mortgage interest deduction from $1,000,000, to $750,000.[1] Essentially, if one bought a home today and financed $1,000,000 of the purchase price[2] interest on only $750,000 of the loan would be deductible. That’s pretty straightforward. This applies to interest secured by a primary or secondary residence, so long as the combined loan amount – commencing in 2018 – does not exceed $750,000. Continue reading “Available Mortgage Interest Deduction under Tax Cuts & Jobs Act (“TCJA”)”

What follows is a summary of tips when the seller is, or may be, a “foreign person” as defined by FIRPTA:

Buyer Responsibilities Under FIRPTA.  If the transaction may be subject to FIRPTA, under certain circumstances, the buyer will become the “withholding agent” and be responsible for withholding seller’s tax and transmitting it to the IRS (“Withholding Requirement”).  The failure to do so can result in buyer being held liable for the funds. For this reason, prior to closing, buyers must determine whether their seller is a “foreign person” under FIRPTA and subject to the Withholding Requirement. Seller’s and Buyer’s real estate agents are not FIRPTA experts, and cannot render legal or tax advice. The parties should secure expert advice from tax counsel, CPAs, or other experts before closing.

Working With Escrow.  If the transaction will be subject to FIRPTA, the buyer and seller should so inform escrow to determine the extent to which it can assist with compliance, including handling the Withholding Requirement. If, due to company policy, escrow cannot participate in the FIRPTA-related portion of the closing, if necessary, seller and buyer should agree to move escrow to a title company that can do so, and the parties’ should equally share the cost of any cancellation fees, if applicable. If, due to moving escrow, the transaction cannot be timely closed by the Closing Date, unless the parties otherwise agree in writing, buyer’s earnest money deposit should be fully refunded, and the transaction shall be terminated.

If Seller Is A Foreign Person and Exempt From FIRPTA Withholding Requirement. If the seller is a “foreign person” as defined by FIRPTA, but is exempt from the Withholding Requirement because: (a) The sale price of the Property is not more than $300,000; and, (b) The Property will be occupied as a residence by Buyer who is an individual (or a member of Buyer’s family) for at least 50% of the number of days (excluding days the Property is vacant) during each of the first two 12-month periods following the date of Closing. Buyer should sign an agreement warranting to the seller that buyer intends to occupy the property in accordance with this exemption. Buyer and seller should thereafter agree to cooperate with each other and Escrow, by signing such documents reasonably required to close this transaction.

 If Seller Is A Foreign Person and Not Exempt From FIRPTA Withholding Requirement. Seller and Buyer should agree to cooperate with escrow in closing the transaction in accordance with the FIRPTA laws, including the Withholding Requirement.

If Seller Is Not A Foreign Person. If seller declares that they are not a “foreign person”, seller should, upon request, sign a Certificate of Non-Foreign Status (“Certificate”), which will include disclosure of Buyer’s taxpayer identification number, social security number, or employer identification number (collectively “Nonpublic Personal Information” or “NPI”). The original Certificate should either be held by Escrow, serving as a “Qualified Substitute” under FIRPTA, or alternatively, Buyer should hold the original Certificate in such capacity. In such event, Buyer should covenant and agree not to disclose Seller’s NPI to any third parties unless required to do so by subpoena or court order. Where applicable, Buyer should agree to retain the Certificate until the end of the fifth (5th) taxable year following the taxable year in which the transaction is closed, and during said time to make it available to the IRS upon lawful request.

If, for any reason, Seller fails or refuses to sign the Certificate at Closing, Buyer should terminate the transaction and obtain a refund of all Deposits paid to Escrow, but preserve any legal remedies available against Buyer under the Sale Agreement (e.g. specific performance). ~PCQ


Breaking NewsIn a recent post here, I ranted about our self-absorbed politicians who, by there bickering, dickering, and bartering, had allowed the extension of the tax forgiveness law to move to the back burner of their 2014 agenda – at least until after the mid-term elections, where, as Alec Trebeck is wont to say about Double Jeopardy, “the scores can really change.” And that they did.  The Dems got trounced, as I explained here. Agreement should have been reached in 2013, or at least early 2014. Continue reading “Tax Forgiveness For 2014 Likely Here – Will 2015 Result In The Same Waiting Game?”

FAQs PicFor those folks still holding their breath about whether the Mortgage Forgiveness Tax Relief Act (“the Act”) will be extended, there are strong signs that it will occur. 
On, Thursday, April 3, 2014, the Senate Finance Committee, chaired by Sen. Ron Wyden D-Or, took up the “tax extenders” issue, which includes the Act. Tax extenders” is a fancy term for political pork served up for certain favored groups that have the ear of various politicians.  But rather than being accused of doling out permanent tax breaks for special interests, these perks are created on a “temporary” basis [wink, wink], and then quietly “extended” annually ad infinitumContinue reading “Will The Mortgage Forgiveness Act Be Extended?”

FAQs PicFor those folks experiencing, or about to experience, a “1099 event” resulting from a short sale, deed-in-lieu-of-foreclosure or foreclosure in 2014, these are harrowing times. Will Congress extend the Mortgage Forgiveness Debt Relief Act and Debt Cancellation law (the “Forgiveness Law”)? It was enacted in 2007 so that homeowners would not be taxed on the cancellation of debt that occurs when they dispose of a home that is “underwater,” i.e. the home’s mortgage exceeds its value. Continue reading “Querin Law Update: Will The Tax Forgiveness Law Be Extended to 2014?”

HouseOregon homeowners dodged a big bullet late last month [April, 2013], when some at the state legislature sought to deprive them of the mortgage interest deduction [“MID”] on their state tax returns.  See, my post here.

However, as long as we permit government to engage in profligate spending, the pols in Congress and the state legislatures will continue to find new ways to feed their tax and spend habit. So while the MID was a sacred cow not that many years ago – it’s been on the books since 1913 when the Code was first passed – today, with governments looking for ways to increase revenue [decreasing spending is apparently not an option – unless it occurs accidentally, like the Sequester], it is at risk of being taken away.  So, you can be sure that further attacks on the MID are not far from the minds of those in government whose battle plan depends upon class warfare – just as certain pols depend upon class warfare to remain in office. Continue reading “QUERIN LAW: The Mortgage Interest Deduction”

Taxing Matters(Disclaimer – The following post is for informational purposes only.  I am not a tax lawyer or CPA.  In all cases of debt cancellation, readers are strongly encouraged to seek competent advice from a tax professional familiar with their specific situation.  The material below is a summary only.  For specifics consult your tax advisor.)

One of the basic rules of tax law is that cancellation of debt is a taxable event. For the lay person, cancellation of debt is the same as forgiveness of debt.   It makes no difference how the cancellation occurred.  It could be voluntary – through a short sale or deed in lieu of foreclosure, or certain loan modifications – or involuntary – through a foreclosure.  In the tax lawyer’s lexicon, “cancellation of debt” is referred to as “COD” – like the fish – just harder to swallow.

However, with the housing  and credit crisis forcing many people into foreclosure and pre-foreclosure events that resulted in significant debt cancellation, the Mortgage Debt Relief Act of 2007 was enacted.  Subject to certain exceptions, this law permits taxpayers to exclude taxable income arising from the discharge of debt on their principal residence.  It also applies to certain loan modification events where the debt is either forgiven, or restructured in a significant manner, such that it triggers a taxable event.  For many taxpayers, this new federal law was a “codsend,” if you will.

Here are some of its main features: Continue reading “QUERIN LAW: Tax on Cancellation of Debt in Distressed Housing (2013)”