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firpta tax
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LISA7
Level 1
02-28-2021
05:09 PM
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I have a client that is foreign, however meets the substantial presence test therefore I was preparing 1040 for the past years which included a rental property.
The taxpayer sold the investment property and firpta tax was withheld. It appears the only way to report this withholding is by filing 1040NR. The taxpayer will loose deductions he has been entitled to in past years. I don't know if there is a way around filing the 1040NR verses the 1040. The form 8288a is only availble with the 1040NR.
I read you can file form 843 for an early request refund of Firpta withholding, however the entire amount withheld is not refundable since there will be a capital gain after recapture of the depreciation.
Any thoughts on how to proceed with filing would be greatly appreciated.
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1 Comment 1
itonewbie
Level 15
03-01-2021
11:54 AM
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What your client should have done to avoid FIRPTA withholding was to submit a W-9 at the time of sale.
Since the IRS' schema does not permit the filing of F.8288-A with F.1040 but F.1040NR, the return may need to be filed on paper. If you override and e-file, just be ready to respond to a notice as the IRS' system wouldn't know how to process the F.8288-A you attach as a PDF and may not be able to match the FIT.
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