Saturday, August 22, 2009

US Fideicomiso Taxation

If you own property in Mexico in a Fideicomiso you must file Forms 3520 in its initial year of existence and in its final year of existence. You must file form 3520A for each year that it exists. That form was designed to be filed by the Trustee Bank, but none of them will do it, so therefore under IRS rules you as the beneficiary must file the form. These forms are filed separate your from your personal tax return. These forms must be filed even though your income is too low to require you to file a US tax return.

Failure to file these forms can result in monetary penalties. If the property in the fideicomiso generates no income (your house) or generates income and you have reported it on your US tax return if you attach a late filing excuse the penalties will be waived. If it generates income you did not report on your US tax return you may want to consider the IRS VOLUNTARY OFFSHORE DISCLOSURE PROGRAM which will end on 9/23/09 which could reduce your penalties for non filing and will stop any criminal prosecution for violating US tax law.

More information is at:

If you own property in a Mexican corporation you must file form 5471 with your yearly US tax return whether or not it makes income or you are required to file a US tax return. We will discuss this in a separate blog post.

If you wish assistance with these forms or with the Offshore Disclosure or forms 5471 contact me. I have over 20 years experience in Mexican - US taxation and other international tax matters. I do spend a great deal of time in Mexico and understand its business, real estate and taxes.

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