Federal tax deposit (sale of investment property)

[ILLMAS]

Title company was supposed to wire/send out the estimated tax due on the gain, they forgot and gave my client the full check, they called me asked if I can process it for them, my question is would I have to set them up via EFTPS or can I simply prepare a 1040-ES voucher and mail the payment?

Thanks

[Lion EA]

IRS Direct Pay has worked for a couple of my clients.  Haven't used it myself.

[ILLMAS]

Thanks, it's pretty much like sending out an estimated tax payment, I think my client will probably now prefer mailing out the check.

MAS

[michaelmars]

Never heard of this, how would a title company know the gain? They don't have basis info and aren't accountants.  I know NYS will withhold at the closing for NON-residents a flat percentage but I have never heard of an IRS payment withheld.

[jklcpa]

50 minutes ago, michaelmars said:

Never heard of this, how would a title company know the gain? They don't have basis info and aren't accountants.  I know NYS will withhold at the closing for NON-residents a flat percentage but I have never heard of an IRS payment withheld.

I had one like this years ago with a sale of a SC vacation property by a DE resident.  The client called me for the basis and estimates of the gain and taxes, and he had to pay the tax owed on the sale to the state at settlement.  This rule by South Carolina is specific to nonresidents.  

[BulldogTom]

It is similar in CA, except it applies to everybody and all property (I just went through it on the sale of my home).  You have to certify that the property was a principal residence and therefore the gain is excluded under §121 or if it is a rental or commercial property, you have to show that there is no gain to escape CA withholding.  If there is a gain on the property, you have to have withholding to CA by the escrow company.  If you don't fill out the paperwork, the escrow agent will withhold on the entire sales price.

But none of this applies to Federal Taxes.  Only CA tax.

Tom
Modesto, CA

[Lee B]

42 minutes ago, BulldogTom said:

It is similar in CA, except it applies to everybody and all property (I just went through it on the sale of my home).  You have to certify that the property was a principal residence and therefore the gain is excluded under §121 or if it is a rental or commercial property, you have to show that there is no gain to escape CA withholding.  If there is a gain on the property, you have to have withholding to CA by the escrow company.  If you don't fill out the paperwork, the escrow agent will withhold on the entire sales price.

But none of this applies to Federal Taxes.  Only CA tax.

Tom
Modesto, CA

Yes, Oregon has a very similar law and withholding rules.

[ILLMAS]

9 hours ago, michaelmars said:

Never heard of this, how would a title company know the gain? They don't have basis info and aren't accountants.  I know NYS will withhold at the closing for NON-residents a flat percentage but I have never heard of an IRS payment withheld.

I gave the amount to client to give to their closing attorney to forward to the title company but you are abosulety correct, how the hell will they know the amount.

[Lee B]

Oregon has a one page form where the projected taxable income and resulting state income tax must be calculated either by the taxpayer or his accountant.

The taxpayer has to take the signed form to the escrow agency who withholds the tax from the proceeds and forwards it to the Oregon Dept of Revenue.

The escrow will not close without the form.

[SaraEA]

Maine just takes a flat percentage of the sales price for out of state residents and the taxpayer has to file a ME return to get their money back.  The states probably know too well that they will never hear from these nonresidents unless they hold some of their cash.

[jklcpa]

 

10 hours ago, michaelmars said:

but I have never heard of an IRS payment withheld.

9 hours ago, BulldogTom said:

But none of this applies to Federal Taxes.  Only CA tax.

Oops, the original post was old enough that I forgot that the original post referenced federal estimated tax.  Sorry, I read the post too fast in responding. I have never seen federal tax withheld either.  

[BulldogTom]

2 hours ago, SaraEA said:

Maine just takes a flat percentage of the sales price for out of state residents and the taxpayer has to file a ME return to get their money back.  The states probably know too well that they will never hear from these nonresidents unless they hold some of their cash.

CA does the same thing for non-residents.

Tom
Modesto, CA