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Video instructions and help with filling out and completing Are Form 843 Withholding

Instructions and Help about Are Form 843 Withholding

Welcome to video 5 in the series. What does FERP (the refunds) do? My name is Richard Kahn, director and one of the experts here at the firm. This video is comparing FERPA withholding to IRS tax - huge difference available in our video section online at FERPArefunds.com. Some foreign sellers think FERPA is a non-refundable flat 15% tax and do not file for a refund. They have three years to do so after a closing or disbursement before the statute of limitations runs out and the IRS can keep their money where they're withholding forever. The 15% withholding is big money, as we'll see. This is because the FERP withholding is on the whole pie, so to speak, the full sale or disbursement amount. On the other hand, the actual IRS tax is only on the capital gains portion, so to speak. Let's take a look at some examples here. Example one illustrates an exemption from withholding and tax completely. It's a residential property purchased for personal use by a buyer who will occupy it at least 50% of the time each year for the next two years after closing. It fits into the $300,000 or below properties and usage range. Example 2 is a residential use buyer occupancy scenario, like the last example, but here we see that the sale price is above the $300,000 minimum threshold and below the $1,000,000 maximum for this exception. That FERP withholding rate would be 10% in that range instead of the normal 15%. So, the property cost $400,000. It sold for $700,000, which is within the exception range. Commissions and improvements added $50,000 to the basis, so it's $450,000. The profit is now $250,000. It sold to a buyer who will occupy it full-time, so the further exception of 10% stands. The 10%...