Tuesday, December 22, 2015
Saturday, December 19, 2015
Sunday, November 15, 2015
Tuesday, November 3, 2015
Saturday, October 31, 2015
- Though most foreign assets are reportable on various specialized forms filed with your US tax return,. If you own foreign real estate and title is in your own name (or a Fideicomiso) and do not rent out the property, there is no reporting required on your US tax return or for that matter any other reporting due the US Government.
- Foreign mutual funds (and most foreign money market funds) require filing of another special form with your tax return. If you do not file this form and make elections to report the income each year, you are penalized with higher taxes and interest when you finally sell your foreign mutual fund. These rules were put in many years when Congress was convinced by US Mutual Fund companies that there business would be hurt unless investment in foreign mutual funds was made unfavorable for tax purposes.
- The 2015 the $100,800 US foreign earned income exclusion applies to earned income (wages or self employment) income earned abroad if you meed the physical presence test or bonafide resident test. You can see if you qualify in IRS Publication 54. It is not automatic and can only be claimed on your US tax return. The IRS can deny this exclusion if you file your return more than 18 months late. This exclusion does not apply to rental income, dividends, interest or capital gains or any income other than earned income.
- You must report your rental net income in Mexico from your Mexican real estate on your US return and you also owe taxes on it in Mexico even if you are not a resident. In Mexico you must pay Mexican income taxes on it and also pay IVA tax. (read more on these rules at www.rentaltaxmexico.com ) If you are renting for only a short time, you may also owe local lodging excise taxes. The Mexican income tax can be claimed as a credit directly offseting any US income tax you owe on the rental income. The IVA and lodging taxes can be deducted on your US tax return as rental expenses.
- If you own 10% or more of a Mexican corporation you may have to file form 5471 with your US tax return if required by the rules governing that form. Failure to file that form in a timely manner may result in the IRS assessing a $10,000 US penalty for failure to file even if you owe no taxes.
- The US has a tax treaty with Mexico. It also has in the past year entered into an OECD agreement where the two countries have agreed to exchange income tax information with the other. At some point in the future what you do in Mexico will not stay in Mexico and visa versa.
- If as a US Citizen you have lived and worked in Mexico for a while and not filed your US tax return, the IRS currently has a “streamlined program” that may allow you to catch up by filing only the past 3 years US tax returns and past six year FBAR (foreign bank account reports). They will not penalize you under that program for failing to file FBAR forms or other foreign reporting forms. They have stated they may discontinue this program at any time. Now is the time to surface with the IRS and avoid potentially huge penalties.
- FBAR (foreign bank account reporting forms) must be filed each year with US Treasury if at any time during the calendar year your combined highest balances in your foreign financial accounts exceeds $10,000 US. This form must be filed on line. Foreign accounts include foreign pension plans, cash surrender value in foreign insurance, foreign brokers accounts, and even gold if held for you in a foreign country a custodian. Failure to file this form or filing it late can result in penalties of $10,000 US or more.
Sunday, October 18, 2015
Mexican Taxes on Rental Income - What are those taxes? What are the penalties if you fail to pay those taxes?
Sunday, October 4, 2015
Saturday, October 3, 2015
Thursday, September 10, 2015
IRS ESTIMATED TAXES BECOME MORE DIFFICULT - IRS NO LONG WILL ACCEPT $100MILLION CHECKS IN PAYMENT OF TAXES
Saturday, September 5, 2015
Tuesday, September 1, 2015
Sunday, August 16, 2015
Saturday, August 15, 2015
Over one-half of the Canadians and Americans who rent their Mexican properties are not paying their Mexican taxes on that income. What are those taxes you owe?
- IVA which is 16 % of your gross rental income (deductible on US return)
- Local Lodging Taxes (if it applies) in the City where the property is located (deductible on US return)
- Mexican income tax on rental income (can be credited against US tax on this income)
The Settlement Company offers the service of filing and paying rental taxes on Mexican rentals for nonresident owners. Read more at www.RentalTax Mexico.com
Friday, August 14, 2015
If you have an arbitration clause in your agreement you can usually get a decision within 6 months to a year and have that arbitration decision entered with the court as a judgment very quickly. It is also possible to remove legal disputes from the Mexican Courts and have them resolved with arbitration if both parties agree. The parties may agree just so they both get a quicker decision and possibly a more knowledgeable decision.
When parties arbitrate they can pick the arbitrator with experience in the particular area of law governing the dispute. Often when disputes are litigated in Court, the judge has little or no background in the governing law and therefore the final decision can be arbitrary and not predictable.
Arbitration decisions in most situations cannot be appealed. But if you have chose a knowledgeable arbitrator (1 or 3 arbitrators can be used ), and it saves you waiting 5,10 or more years for a decision, that disadvantage may be worth ignoring
In lieu of arbitration of disputes, consider mediation. When parties mediate a neutral mediator with experience in the applicable laws works with the two opposing parties to help them reach a mutually satisfactory resolution. Statistics show that mediation has a 30 to 50 percent chance of success and it is significantly less expensive than arbitration or litigation in Court.
Want to know more about Arbitration or Mediation in Mexico? Want the proper provisions included in your legal agreements and wish to know how to arbitrate your legal dispute in Mexico? To learn more email us at firstname.lastname@example.org. Don D. Nelson, Attorney at Law, CPA.
Tuesday, June 23, 2015
Saturday, June 13, 2015
Over sixty informative articles on every subject from experts in each subject matter - http://www.mlsinbajasur.com/real-estate-articles.html
Friday, June 5, 2015
Saturday, May 23, 2015
US Businesses (both Corporate and Individuals) Must Report Receipt of Cash to IRS to avoid Criminal Time
Thursday, May 21, 2015
By Linda Neil
Who Collects the Tax
On the sale of a primary residence
For those who have sold or transferred a primary residence within the past five years and have not declared an exemption previously, an exemption of up to 1,500 UDIs or approximately 6,500,000. Mexican pesos, is available.
This applies to nationals and to those foreigners who have established a tax residency in Mexico (obtained their tax identification numbers) and make declarations on world wide income. They must also provide documents that the property being transferred is a primary residence.
On the sale of a vacation home or rental property
ON RENTAL INCOME: There are several ways to calculate tax on rental income:
2. A 30% tax on income, less allowable deductions which include property tax, maintenance, interest on loans for construction expenses, insurance, salaries of employees and commissions paid to rental agents and property managers.
3. A 25% tax on the gross income, no deductions.
Hacienda is paying more attention to internet advertising and is beginning to inquire into the income of those who are renting their homes. It makes sense to become legal since penalties for non-compliance can be considerable. Methods one and two above require the RFC (taxpayer identification number) which can be challenging for a foreigner to obtain. Method three outlined above does not require residency or official status.
READ MORE ABOUT COLLEGE EDUCATION BENEFITS FOR EXPATS AND THEIR CHILDREN HERE
Friday, May 15, 2015
Monday, May 11, 2015
DIRECTIONS FOR FILING FBAR (FORM 114) FOREIGN FINANCIAL ACCOUNT REPORT ON LINE - THIS IS DUE 6/30/15 FOR 2014
You can download step by step directions for filing the Form 114 (FBAR) to report your foreign financial accounts HERE If you need help filing this form or want a CPA/Attorney to file the form for you email us at email@example.com. Also if you have questions on whether or not you should file the form or need to file ones for past years (the statute of limitations is six years which means if you are required to file the form you should file the past six years) please contact us. www.expatattorneycpa.com
Friday, April 24, 2015
This past July another change, without pomp, circumstance or notification, was passed that became effective September 1st of this year. This change affects ALL real estate purchases, and ALL buyers and sellers who are foreign or national. READ MORE
Thursday, April 9, 2015
Tuesday, April 7, 2015
Applications that facilitate the process
No income individuals also have obligations
The SAT advised
- Fill each and every one of the fields of the statement.
- Declare all income which have been collected in the year.
- In the case of being obliged to have the current interim payments in 2014.
- Check the validity of electronic signatures.
- Submit your annual statement as soon as possible and no later than April 30 to avoid penalties.
Expenses you can deduct
- Payments for educational services (school) with the following buffers.Preschool 14,200 pesos; Primary 12,900 pesos; secondary 19,900 pesos; professional technician 17,100 pesos, and baccalaureate or equivalent, 24,500 pesos.
- Medical and dental fees. Drugs are included in hospital bills, analysis and clinical studies. No vouchers are from pharmacies.
- Insurance premiums medical expenses.
- Funeral expenses. Only the amount not exceeding the minimum wage of the geographic area of the taxpayer, raised annually.
- Donations granted to authorized institutions. The amount of donations deducted must not exceed 7% of the taxable income of the previous year to which it is declared.
- Actual interest paid on the mortgage of house room whenever the credit granted does not exceed 1 million Udis 500,000.
- Deposits in special personal accounts for savings, premiums for insurance contracts that are based pension plans and acquisition of shares of investment companies.
- Additional contributions for retirement. The amount of this deduction shall not exceed 10% of its taxable income for the year, without those contributions exceed the equivalent of five minimum wages of its high geographic area annually.
- School transport (mandatory) of children or grandchildren.
- Payments for educational services with the following buffers: Preschool 14,200 pesos; Primary 12,900 pesos; secondary 19,900 pesos; professional technician 17,100 pesos, and high school or equivalent, 24,500 pesos.
Friday, February 20, 2015
|With the meteoric rise of real estate prices here in Cabo, there are many people realizing gains on their homes when they sell them. When you purchase and sell real estate in Mexico for a profit, you are responsible for certain capital gains tax. This information was prepared to keep you informed about the tax system in Mexico. We also recommend you to consult a notary and/or an experienced tax advisor.|
Capital gains tax is based on the profit you make when you sell your property in Mexico, when property changes hands, the notary withholds a certain percentage, based on the difference between the recorded value on the title (fideicomiso) and the sales price with a variety of deductions.
New Rules for Capital Gains in Mexico Starting 2007
Mexico, as well as the United States, provides its residents a capital gains tax incentive for their primary home. The new tax incentive in Mexico states that if you sell your “primary residence” after five years, you pay no capital gains. This law is in place for residents (Mexicans or foreigners), and in order to provide proof that your house is primary residence you need can provide one of the following documents:
1) Phone Bill
2) Electricity Bill
3) Local Mexican Bank Statements
The documentation above needs to be addressed to the property owner, his/her spouse, or his/her ascendants or descendants using the address of the property being sold. Another distinction made on your primary residence is that the land it resides on shall include no more than 3 times the total covered area of construction for the house. This is to prevent the qualification of the capital gains exemption when a land owner sells several acres of land with just a small house on it.
Article 109 XV of the income tax law called “Ley del Impuesto sobre la Renta” was recently modified and now exempts from the tax any primary residence sold for an amount no exceeding one million five hundred thousand units of investment (UDIS) which is approximately $500,000 usd as of today. UDIS is a unit of investment calculated in respect to the rate of inflation. The value of a unit is established by the Banco de Mexico, which is published on the internet at www.sat.gob.mx/nuevo.html.
If a homeowner sells his house before he has resided in it for 5 years, he will be responsible to paying the capital gains tax for an amount that exceeds the one million five hundred thousand UDIS.
Please keep in mind too that the capital gains exemption for your primary residence is applicable only once per year.
Hopefully, this information has proven helpful to you and gives you a better idea of what you will have to pay in terms of capital gains taxes once you do sell your home here in Cabo.
|Happy House Hunting,|
Los Cabos Agent
US TAX NOTE; Remember you can also claim on your US tax return a primary residence gain exemption if you qualify of $250,000 if single or $500,000 if married, if you live in the house full time for 2 full years out of the five years prior to sale. If it is a vacation property it is not eligible for this US tax exemption, but you can take a foreign tax credit for the taxes you pay in Mexico on the gain which should in most situations offset the IRS tax on any capital gains on sale. Most states however do not allow a foreign tax credit on state returns and therefore you may owe capital gains in your state of residency.
Write us for more information: firstname.lastname@example.org
Tuesday, February 10, 2015
Expats C should all move to Bulgaria. Though if you are US expat it may make no difference. Definitely do not retire to Spain, France or Portugal. As a US Citizen you will end up paying a lot more taxes.
From the Wall Street Journal. http://blogs.wsj.com/expat/2015/02/09/the-worlds-best-and-worst-tax-rules-for-expats/
Saturday, January 31, 2015
Citizens living abroad and certain noncitizens - You are:
To read about the other exemptions from the US ACA health care law, and tax read the following link http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Exemptions
We are ready to help you with these complex rules. www.TaxMeLess.com We offer a mini consultation to give you answers to all of your expat and international tax questions. We also offer a service to review self prepared expat returns or foreign tax forms which is much less costly than having us prepare the returns. Email. email@example.com