1040 line 25 for 8288a

[jeffo45]

I sold my home after one year and my wife was not in the USA due to travel restrictions due to covid (Philippines). The title company withheld 5% of the total sale price because she had not lived in the home. She doesn't have residency anymore and was not present so I was given a copy of a 8288-a form and doing my taxes I entered this amount on line 25 of my 1040. 

The more I research this the more confusing it becomes. My spouse's social security number is on the joint return and I would think it would 'automatically' be recognized by the IRS. I have the downloaded TurboTax version and no ability to upload the form from the title company (first time for them) and I wasn't told about the 8288b and getting the tax withholding reduced nor did she receive any correspondence which I was told she would. 

Is there something I'm missing? I just see a lot of documents another 1040NR and others which don't apply to me as I was a USA resident for most of 2022 and a citizen from birth.

Any advice greatly appreciated 

[RobertB4444]

To start with, I would take this to a tax professional.  The exclusion for the sale of a primary residence is a big deal and there is no reason why you should not get it for both you and your spouse provided you are both citizens and she had the home listed as her primary residence and was only unable to live there due to travel restrictions.

If there are issues with your wife's citizenship then that may make a difference as well.

If you are going to continue with self-preparation then I advise you to enter the home for the exclusion into your tax return and try adding a letter to the IRS explaining your situation and then mailing your return instead of filing electronically.  It will significantly delay whatever refund you are due but it will be the safest way to deal with this.

@jeffo45 

[jeffo45]

Thanks for the timely advice. My wife is not a citizen nor a LPR as she had returned to her home country but the title company asked me info about her then withheld taxes from the complete sales price which I had paid cash for. She does have her SS # as that doesn't expire. I'm living overseas now myself and finding a tax pro locally who can guide me is a slim chance.

I assume they will send a request for more documents to my foreign address from which I filed, so yes I think this will take some time. The withholding covered the capital gains and and my retirement income by about triple so I assume I won't owe them as the IRS has the withholding money.

My wife never lived in the home and was not on the title but it was a one signature to buy two to sell state so I have a POA form that I used in selling the property and also covers all financial stuff...

Maybe I need to take a trip back to the states to straighten this out eventually

Thanks again!

[DianeW777]

If you mail your tax return you can include the Form 8288-A copy B with your return as proof of Foreign Investment in Real Property Tax Act (FIRPTA) tax withholding. Include the amount in your tax return by using the steps below. Also include the sale in income unless you qualify for the home sale exclusion (it doesn't appear as though you do based on your comments). The rules for home sale exclusion can be found at the link below.

• IRS Topic 701: Home Sale Exclusion 
• Tax Aspects of Selling Your Home

1. Sign into your TurboTax account > once inside the return select Deductions and Credits at the top
2. Scroll to Estimate and Other Taxes Paid > Show More > Start/Revisit beside Income Taxes Paid > Scroll to Other Income Taxes Paid in 2022
3. Continue to Start Withholding not already entered on a W-2 or 1099

This will allow both federal and state additional withholding not entered in any other location.

For Future Use:

You can file a Form 843 (Claim for Refund), together with a Form 8288-A, to show the estimated tax on the sale. This is the IRS's official process for obtaining an early refund of FIRPTA withholding.

• Form 843 and Instructions

[jeffo45]

I only have the 8288a from the title company. They said a copy would be sent to my wife overseas, 8288b but it never happened. From what I could tell the 8288b is if you apply for the reduced withholding before the closing of the home, so I assumed that is why she never received the 8288b. I was hoping the IRS had the ability to see that the withholding was legitimate with her SS number on the joint return? TurboTax says I have not printed or e-filed my federal return but the "where's my refund" shows it's still processing.

So all we have is the 8288a, nothing else. I hope that is sufficient if I mail a copy in?

[zhangfanrdfz]

Hi @jeffo45 , I am in the similar situation. My wife and I are not US citizen nor green card, but we meet Substantial Presence Test so we should do the regular 1040 married file jointly, not 1040NR. 

Sold my home in 2022 and both me and my wife got a 8288-A, 5% withholding for each of us. I also did some research and as you mentioned, they are all referring to 1040 NR, which does not apply to my situation. 

From what I know at this moment, I should do the 2022 tax return as usual, by the end of TurboTax, instead of efile it, I should print out, attach the 8288-A, and mail it, then wait for IRS to process it, which may take a couple of months.

[jeffo45]

Did the title company send you a 8288b? I called the IRS today and my wife should have received that form but never did. I was told to send that form as I've already e-filed but never got it. They said to send in the returned check with the title company EIN number and an explanation to get credit. I filed 1040 regular as I'm a citizen my whole life.

What really gets me is I paid cash for the house and they withheld not just the profit minus fees but the 5% of the total sale price. I have a feeling something got lost or the title company didn't correctly submit the paperwork. It's pretty frustrating, hopefully get it sorted.

[zhangfanrdfz]

Hi @jeffo45 , I never received any 8288-B, all I have is the stamped 8288-A copy B, sent from IRS. On the 8288-A I received, the buyer's SSN and Title Company's identification # are scratched/covered with black pen.

Same as you mentioned previously, I think 8288-B is for reducing the withholding amount, which should be done before the closing the house.

My withholding percent is 10%: 5% on me, 5% on my wife, and it is based on the total sale price, not the price difference.

You said you called IRS, is IRS asking you to mail the 8288-A copy B or 8288-B? They are 2 different forms. From the research I made, I see IRS mentioned to send 8288-A copy B, not 8288-B.