What You Need to Know Before Attempting a DIY Project

What You Need to Know Before Attempting a DIY Project

If disaster has recently come upon your home, or you are simply looking to improve an aspect of your living space, you may have recently considered doing the job yourself. There is an array of shows, magazines, videos, and other media dedicated to what is known as DIY (Do It Yourself) projects. In addition to spreading knowledge and how-to pertaining to home projects, they promote a feeling of independence and self-reliance with homeowners.

While doing their own jobs can be a positive endeavor for homeowners, the line between what is doable alone and what needs the eye of a professional can occasionally become blurred. The cost for labor is a figure that continually rises, and that cost can be a huge burden for new homeowners that budget wisely. That feeling that contractors will nickel and dime their way to a hefty profit is enough for many homeowners to say, “I think I can try this myself.”

If you’re going to take on a DIY project, it is important to gage the scope of each project. Knowledge, skill, cost, and safety are all areas that need to be considered to ensure a project is done correctly and with no possibility for future damage.

Deciding if a Professional Is Necessary

Whether a professional contractor is a necessity to a job is entirely dependent upon the job. Brutal determination to do it yourself is not always the best way to approach big projects around your home. The job should always be done properly, and some high-skill jobs do require licenses and permits just to get started.

Determining whether a job is doable on your own starts by finding the answers to a few big questions. Will hiring a professional truly be costlier if I make a mistake? Do I have all the necessary experience? Do I have all the tools I need?

When considering if you have enough experience, consult your contractors and others who have done the job before. You may need to reconsider if it seems like a job you may easily botch or a project that can go bad over time. A mix of both hiring professionals and DIY can also be a great alternative, as many little contracting jobs can be taken by the homeowner. Picking up leftover trash afterward is one of many great ways to save on jobs done by professional contractors.

Safety

It is estimated that hundreds of thousands of people are hurt each year in preventable DIY accidents. Accidents with blades, power tools, and corrosive chemicals all occur with home projects. Research done beforehand is essential in understanding what tools will be needed as well as what you should wear. Knowledge that a power washer can peel back skin on your hand isn’t necessarily general information, so you should research DIY hazards.

Before enlisting yourself in a project, consider these few safety tips.

  1. Power Tool Safety. List out all the tools needed for each project, including lessthoughtof items like spades, hammers, or clamps. Going over the operating ability of your tools can make them less susceptible to malfunction. All blades should be sharpened, as dull blades can cause serious damage. Electrical cords should be in working order, and each tool should be cleaned of dust or debris. Always read the manual if you have any questions about the function of a tool. 

  2. Wear Proper Attire. Depending on what each job entails, the proper clothing and gear can aid in keeping you safe from bodily injury. Goggles for projects involving dust, debris, or flying objects are a necessity. Different sorts of gloves, boots, and clothing are always a must for any sort of project. Always research what sorts of materials you are going to encounter and what actions will be done to those materials.

Completing DIY projects around your home can be a great way to save money otherwise spent on expensive contractors and professionals. Before starting, make sure that you have enough experience and the necessary tools to complete the job. And always make sure that you practice power tool safety and wear protective clothing.

IRS Extends Review Time for Non-Resident Tax Returns

house tax
The Internal Revenue Service has extended its hold on certain tax refunds for returns filed by nonresident aliens and other foreign taxpayers on Form 1040NR beyond the usual 180-day limit in order to give extra scrutiny to the refund claims, leaving many undocumented immigrant workers waiting up to 360 days to get the tax refunds they filed this year

The delays may also affect non-resident owners of US rental property where withholding has been applied by their management company or booking agent on rental income received on their behalf. The agents generally provide Form 1042-S to the owner – the form states the amount of rental income received and any withholding applied.  This form must then accompany the non-resident tax return to the IRS for processing any refund.  The IRS claims that they need additional time to review these credits “due to the complexity of some of these refund claims” and that taxpayers will be notified if additional time is needed.

To minimize any potential delay, provide your management company or booking agent with your ITIN by completing and submitting Form W-8ECI.  By completing this form the non-resident owner establishes that they are not a U.S. person, that they are the beneficial owner of the income and that the income is effectively connected with the conduct of a trade or business in the United States.  With this form on file your agent is not required to withhold 30% of rental income.

Reprinted with permission. For further information visitwww.hbitax.com

How to Avoid Foreign Investor 30% Withholding Tax

house tax papers and money

What is 30% withholding?
Depending on how you treat the investment property, IRS sometimes requires management companies to withhold 30% of GROSS rents to be withheld and sent to IRS.

How is 30% calculated on a net lease?
The 30 percent withholding tax applied to the gross income rather than the “net rent” received. Thus, the real estate taxes, operating expenses, ground rent, repairs, interest and principal on any existing mortgages, and insurance premiums paid by the lessee on behalf of the foreign owner-lessor, must be included in gross income subject to the 30 percent withholding tax.

30% withholding is bad for cash flow?
Picture yourself buying a 2 bedroom condo and which rents for $1,000/month.  Your rental agent has to withhold $300 right off the top before you pay any expenses. What if AC broke that month and you had $2k in expenses for a new system? Tough, $300 gets withheld.

Common misconception
One of the biggest misconceptions and stopping blocks for Foreign Nationals, aka non-resident owners, when buying real estate in a US, is they think 30% withholding is unavoidable and mandatory. If management company does not know how to deal with the situation, or CPA does not know the forms to file in order to avoid it.

Form to file to avoid 30% withholding
I got this directly from a tax firm: In order to avoid the 30% being withheld by your property manager on the gross rental income, the nonresident owner must provide a Form W-8ECI to the property management company. The Form W-8ECI informs the property manager that the owner is electing to treat the rental activity as a U.S. trade or business and obligates the owner to file a U.S. income tax return to report the rental activity.

How do you pay taxes on rental income as a foreigner?
Property management company will provide 1042-S to IRS and you. You will need that form to file U.S. tax return using form 1040-NR.

IRS Reference
For more detailed information visit the IRS Website

Disclaimer:
I am not a CPA and I am providing this for informational purposes only. You should verify this information with your own CPA to see if it’s applicable in your situation.