When real estate in the US is purchased by a foreign person, filing Form 8288 and 8288-A are required to report and pay the FIRPTA tax withholding. Knowing what information is required for an ITIN and withholding certificate is essential for buyers and sellers to avoid paying more taxes than necessary.
What is Form 8288-A?
Form 8288 and 8288-A are IRS forms used in the sale of U.S. real estate by non-US persons. When filed, Form 8288 reports and pays the required FIRPTA withholding tax, and Form 8288-A allocates the withholding to each seller. Copies A and B of Form 8288-A are submitted to the IRS along with Form 8288, and Copy C is retained by the buyer’s files. The IRS will then stamp Copy B and send it to the seller, who is responsible for filing a tax return in order to receive a credit for the withholding. In addition to the forms, a withholding certificate, ITIN, and other documents must be submitted to the IRS. If needed, a tax professional should be consulted in order to file correctly.
IRS Form 8288-A – Who Needs to Fill It Out?
Form 8288 and 8288-A must be completed by any buyer of U.S. real estate from a non-U.S. person. Form 8288 must be submitted to the IRS within 20 days of the sale, but if a withholding certificate application is still pending at that time, then it must be submitted 20 days after the IRS issues the certificate or notice of denial. Additionally, Form 8288-A must be submitted, which contains three copies (Copy A, B, and C). Copy C is for the buyer’s records and Copies A and B should be sent to the IRS with Form 8288. Copy B is to be kept by the seller as proof of withholding so they may receive credit for it when filing their taxes. To apply for a withholding certificate and an ITIN, the buyer must submit the relevant forms along with passport copies and the closing statements for the original purchase and sale of the property, a net gain calculation spreadsheet, and receipts for any improvements.
Step-by-Step: Form 8288-A Instructions For Filling Out the Document
Following Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests instructions to fill out the document, the buyer is required to submit Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests, with three copies: Copy A, B, and C, to the IRS along with Form 8288. If an ITIN and withholding certificate application is required, the seller must submit the package including Form 8288, Forms 8288-A Copies B and C, Form 8288-B with original signature, Form(s) W-7 with original signature, certified passports for each seller, the HUD closing statements for buying and selling the property, signed contract of sale, a spreadsheet calculating the net gain on the sale, and receipts to prove improvements listed on the net gain calculation. The IRS will stamp Copy B and return it to the seller. After the filing is done, the seller or CPA may provide a copy of the certificate and copy B of Form 8288-A to the IRS for an early refund if excess withholding tax was submitted.
Below, we present a table that will help you understand how to fill out Form 8288.
|Information Required for Form 8288||Details|
|Form 8288-A Submission||Submit Form 8288-A with three copies|
|Additional Documents||Include various documents like Forms W-7, passports, etc.|
|IRS Stamp||IRS will stamp Copy B and return it to the seller|
|Refund Process||Follow the right steps to obtain a refund|
Do You Need to File Form 8288-A Each Year?
When real estate is sold by a non-US person, Forms 8288 and 8288-A must be filed to report and pay the FIRPTA tax withholding, with copies of Form 8288-A, passports, HUD closing statements, signed contracts, net gain calculations, and receipts to prove improvements. Form 8288 is due within 20 days of the sale, with the full withholding amount paid even if the IRS has not issued a withholding certificate. The IRS will still issue the withholding certificate at this point, and a copy of this certificate, along with stamped copy B of Form 8288-A, may be provided to the IRS to obtain an early refund of excess withholding tax. However, the seller MUST still file a U.S. Federal and state income tax return for the year of the sale. Consult a qualified tax professional for assistance.
Download the official IRS Form 8288-A PDF
On the official IRS website, you will find a link to download Form 8288-A. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8288-A