Sunday, October 4, 2015

IRS To Start Sharing Tax Data with Mexico

The Internal Revenue Service has kicked off a new program under which it shares large amounts of individuals’ financial-account information with certain foreign countries, the agency said Friday.  One of those countries is Mexico
If you are a permanent resident of Mexico, or dual citizen and your are not reporting all of your worldwide income on your Mexican tax return (if you file one), the Hacienda (SAT) may soon be at your door with their yellow tape and asking about all of  the income on your US return that you have not reported on your Mexican income tax return.  If  you are in Mexico more than 183 days you are considered a full time tax resident and must report and pay taxes on your worldwide income in Mexico. That is not as bad as it sounds since you do get a tax credit on your US return for monies earned in Mexico which offsets your US tax on the same income. .... and on your Mexican tax return you can get a tax credit for taxes you paid on income from the US.  It gets complicated. 
The IRS said it received digital information about U.S. taxpayers’ foreign accounts from governments and firms around the world, and it sent information on foreigners’ U.S. accounts to government authorities in as many as 34 countries. While governments have exchanged such information in the past, the sharing wasn’t automatic and the scope was often far narrower. The deadline for the exchange to begin was Sept. 30.  Read more  below  and see what countries are on the exchange list in the linked Wall Stree Journal article.

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