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John P Fazzio III
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John Fazzio’s Answers

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  • Taxes as 1+1 or 1+0?

    I'm on a j2 visa with a valid EAD. my question is the taxes that I pay, should I enrol in 1+0 or 1+1. Don't have kids atm so it could either be one or the other. Any help will be greatly appreciated.

    John’s Answer

    Withhold the maximum. You don't want to end up owing. Better to be safe than sorry on this.

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  • Affordable Care Act Tax Penalty

    This question is for my buddy. His two family members are legally immigrating to the US in couple of months. He wants to claim them as dependents on 2015 tax return. First question, can he claim them as dependents? Second question, Can he fa...

    John’s Answer

    As I posted previously, you just need to have them comply with 50% residency/50% expense requirement and they can be dependents. The ACA may apply, but it depends on their coverage while abroad.

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  • Is it legal to gift and not pay tax?

    What is the limit on tax exemption if my spouse and I gift property to each other? We were told that we can gift property, vehicles and stocks to each other and fill out the relevant forms and save on tax.

    John’s Answer

    There is no tax on gifts between spouses.

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  • Obamacare Tax Penalty

    This question is for my buddy. His two family members are legally immigrating to the US in couple of months. He wants to claim them as dependents on 2015 tax return. First question, can he claim them as dependents? Second question, Can he fac...

    John’s Answer

    He can claim them as dependents, but the test is if they live with him more than 50% of the year and if he pays more than 50% of their living expenses. There may be a an ACA penalty, but don't get too hung up on it.

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  • Can my parents take out a mortgage/home equity loan on their paid-off home and give me the money without creating any tax issue?

    Parents are thinking of taking out a home equity loan or a mortgage on their paid-off home to help me with student loan (and other) debt consolidation. We've determined this would be the best course of action to assist with lowering loan payments ...

    John’s Answer

    You need to consult with a Tax Attorney in New York on these issues. There are a lot of options and a lot of play in what you can do.

    There are multiple scenarios. Let's just say that if they give you $100,000 outright, there will be gift tax consequences beyond the $14,000 that is automatically excluded. But, you can get $14K as a gift, tax free, each year, from each parent.

    So in Year 1 -- there can be $28,000 given to you, in Year 2 -- there can be $28,000 given to you, in year 3 -- there can be $28,000 given to you, and in year 4, there can be $16,000 given to you -- if done correctly -- with no tax consequences. Your parents, however, will be taxed when they pay back the loan.

    Before delving into this further, I'd say this... even if they have gift tax consequences, it is superior to the consequences for you if it is formulated as a loan where you pay back monthly payments. Reason being is that there is something called "Cancelled Debt Income" that could get both you and your parents into trouble. This should be avoided.

    If you are covering the monthly payment on the HELOC anyway, you are paying with after-tax income, so you will be shouldering the burden of taxes on the payment regardless. You just want to minimize it as far as possible.

    The limit on the HELOC is $100,000 for it to be subject to the mortgage interest deduction, just as only the first $1,000,000 of home purchase is eligible for the mortgage interest deduction. The idea is they don't want to subsidize millionaires buying more expensive things and getting a tax break and anyone exceeding those numbers doesn't need the tax breaks which are primarily for the middle class.

    They will get the benefit of the mortgage interest deduction on their payments if this isn't phased out. For income over about $170K you start to lose the benefit due to phase outs and Alternative Minimum Tax.

    Having you on the deed is not wise, particularly if you have derogatory credit marks for student loan and other debt. Keep yourselves financially separate. In 5-10 years, you will have good credit and can become involved with property ownership and other investments then.

    Hope this helps. It is a complex issue, but you are on the right track.

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  • If you are married and head of household what rights do your spouse have?

    If you have a NYCHA apartment before you got married and put your spouse down as family composition, what tenacy rights does the spouse have? Ultimately what determines who has the greater right if you decide to divorce?

    John’s Answer

    Pre-marital property is not subject to equitable distribution. If he/she shared in the leasehold this may alter the result. You should speak with a lawyer who deals in divorce about the consequences. Use the "Find a Lawyer" tool that Avvo has and seek a NY Divorce Attorney.

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  • Is there different tax treatment for non-US citizen or non-resident?

    I am selling a condo unit which I purchased less than 1 year ago. I have foreign passport. Is there different tax treatment for non-US citizen or non-resident?

    John’s Answer

    Ms. Syed has it right. As a permanent resident you are subject to the 30% withholding regime wherein you must pay over this amount toward the gain. A non-resident or NRA does not have the same obligations as a permanent resident.

    But FIRPTA still comes into play even if you are a non-resident or NRA. And 10% of the gain can be collected on sale.

    Best case scenario, you still have to pay capital gain rates for long term capital gain (if sold after 1 year, not yet the case) of 15%. 10% of the Amount Realized would also be collected for FIRPTA tax -- essentially, in order to ensure you actually pay the US taxes due. So you are talking a tax obligation of 15% to 25% of the gain as a best case.

    You also have to factor in how you've been filing and whether you have made the elections to offset with any deductions, depreciation, etc. you may have.

    All-in-all, there is a best case here, that can be determined pretty quickly with all the information. You just need to get a tax adviser involved to steer you through the intricacies.

    You have to carefully analyze the following:

    1 - how assets are held (personally or in corporate solution)
    2 - does 30% backup witholding tax apply and/or is this ECI ("Effectively Connected Income")--the 2nd does not appear to apply
    3 - do I have separate tax on gain for the US Property--reportable on 1040NR or Sched D if ECI

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  • How do I file my taxes? Does she have to pay taxes if she didnt work her or earn any income while on student visa

    I recently married my wife who I met while she was her on a student visa (non working ). We never even lived together after college she went home to help family in asia. I have continued to live and work as a single individual financially. How d...

    John’s Answer

    I had a similar situation with a client recently and could certainly answer any follow-up questions you may have.

    This is a bit of a tricky issue. If you file married filing joint, you'll have to include her income earned overseas, if any.

    If you file married filing separate, you'll be penalized and overpay.

    If you file single, even though you are married, the return may be examined. However, and while it is legally a gray area, I believe in this situation, if she did not live with you, and you did not start a household together, then you can still file single until such time as she moves back in with you---and then you can start filing married filing joint---when she is in the US full time.

    The reason I believe this is the case is that there are definitions and notes in various IRS regulations regarding filing status that give me good grounds to believe this is the proper approach. Admittedly, however, this is not the traditional advice and may be a bit risky. Thus, I would only recommend it if your wife had significant earnings overseas that should not be subject to US tax.

    Another option is to file married filing joint, but claim Treaty Benefits for the foreign-source income she earned in Asia.

    One last, important, point. Immigration wants to see a few years of tax returns, especially if she was a US Resident. If she is hear primarily on a Visa, I imagine you are getting into the process of filing to get her a green card and/or naturalize her soon. She apparently is not in a position to move-in with you full-time until she finishes school and would ostensibly then be in a position to enter the job market.

    You want to reflect the marriage and reflect the consequences of marriage including tax filings are being respected -- before you have immigration interviews. So, I would consult an immigration attorney on this, and/or ask for whatever attorney you hire to work out the tax issue (if any) to give you some advice about the immigration process as well -- after fully setting out your plans.

    Hope this helps!

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  • 60days notice or 90days notice to evict tenants (foreclosure)?

    I am a new owner of the property. I got it through the foreclosure sale. Current tenant is not a former owner but have a lease agreement with the former owner, and lease is month to month now. I have not renew the lease agreement with them(th...

    John’s Answer

    I think Mr. Roach has summed it up nicely. When dealing with the Sheriff's Office after the notices are sent, be sure to have the chain of lease agreements, including your Assignment of Rents documents in tow.

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  • I'm looking for CT attorney that specializes in subprime lending, mortgage securitization, and foreclosure defense?

    In August 2007, mortgage lender proceeded with foreclosure for failure to pay. Due to the mortgage lender misapplying a large amount of my payments in January 2008, the courts ordered in my favor. Due to the mortgage lender ignoring the court ord...

    John’s Answer

    Mr. Vincenzo is correct. We can not directly solicit business on this forum. Mr. Vincenzo and myself both practice in CT and you can also look and compare other attorneys by using Avvo's Find a Lawyer tool.

    From what you've said I would make a few comments. First, you potentially have a claim under FDCPA or FCRA to have any derogatory marks removed from your credit. Both an attorney and/or a competent credit repair specialist can assist you with something like this. This is separate and apart from your foreclosure case.

    Second, the foreclosure case itself has a long and tortured history. For an attorney to unravel it and determine the proper course of action is going to be a bit expensive. It is also going to take time. Be prepared for this in advance.

    Third, with defaulted debt obligations with problems, it is common for the loan to be passed around like a hot potato. With an attorney's help, you may be able to be properly reviewed for a modification, even though this has not been done to date. Other options include selling the property, even potentially to a related borrower, moving out, renting the property and filing a Ch. 11 bankruptcy to cram down the arrears and clear-up the loan value---although this comes with further credit damage. Sometimes, in a case like this, a cash for keys deal with a large downpayment and a removal of derogatory credit marks can be achieved.

    So, in closing, it depends largely what you want to accomplish. But, have a s clear an idea as possible of your goal when consulting with different attorneys. There are certainly a number of attorneys like myself out there who are competent in this area.

    One closing point is that CT is a non-judicial foreclosure state, and judicial foreclosures in CT relate mainly to properties where there is equity. It sounds like you are in the "judicial" process. This either means you still have equity in the property on paper or there is something else going on that isn't entirely clear from your description.

    Good luck bringing the case to resolution.

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