Excellent Contadore Accountant For Your Mexican Tax Returns

Many expats living in Mexico ask us for referrals to excellent Mexico accountants to help them with their Mexico income taxes and other Mexico Tax Matters.   We  have worked for years with  Lance and Sarahi and strongly recommend them to assist you. English is spoken. If you need help, contact:

Lance E Niederhaus, CPA

CP Sarahí Soto
LS Accounting & Tax Services SC
Mex Cell: +52 (624) 157-6605
Google Voice: +1 (949) 436-7737
Email: lanceniederhaus@icloud.com

If you need assistance with your US tax needs contact us at 949-480-1235 US or at our email address at taxmeless  We have been doing US taxes for Gringos in Mexico for over 30 years. We are experts at helping our clients catch up with the IRS and resolving problems resulting from not filing returns.

Quick Expat Tax Facts for Gringos Living and Working in Mexico

· If you are a US Citizen you must file a US tax return every year unless your income is less than $ 9,500 (for 2011 and lower for earlier years) or have self employment-independent contractor  net income of more than $  400 US per year.  You are taxable on your world wide income and required to report it regardless of whether you filed a tax return in your country of residence.

· As an US expatriate living in Mexico on 4/15, your 2011 tax  return is automatically extended until 6/15 but any taxes due must be paid by 4/15 to avoid penalties.  The return can be further extended until 10/15/12 if the proper extension is filed. You may even be able to get a further extension until 12/15if you send the IRS the proper letter.

· For 2011 if you are a qualified expatriate you get a foreign earned income exclusion (earnings from wages or self employment) of $92,900, but this exclusion is only available if you file a tax return.

· If your spouse works and lives in Mexico, and is qualified, she can also get at $92,900 foreign earned income exclusion. A foreign housing deduction or exclusion is also available if you earn in excess of the foreign earned income exclusion. This amount varies by country.

· You get credits against your US income tax obligation for the taxes paid to Mexico or another foreign country on that same income but you must file a return to claim those credits.

· If you own 10% or more of a  Mexican  corporation, LLC or partnership or are a beneficiary of a Foreign Trust such as a  Fideicomiso in Mexico, you must file special IRS forms each year or incur substantial penalties which can be greater including criminal prosecution if the IRS discovers you have failed to file these forms.

· Your net self employment income or independent contractor income  is subject to US self employment tax of 15.3% (social security) which cannot be reduced or eliminated by the foreign earned income exclusion unless you work in one of the few countries the US Social Security Administration has a social security agreement with and pay social security to those countries. Mexico does not have a social security treaty with the U.S.

· If at any time during the tax year your combined highest balances in your  Mexican bank and financial accounts such as brokerage accounts, cash surrender value of foreign life insurance policies, foreign pensions, etc. (when added together) ever equal or exceed $10,0US you must file a FBAR form with the IRS by June 30th for the prior calendar year or incur a penalty of $10,000 or more including criminal prosecution. This form does not go in with your personal income tax return and is filed separately to a different address.

· In the several past year the IRS has hired more than 2,000 new employees to audit, investigate and discover Americans living abroad who have failed to file all necessary tax forms. Mexico has a treaty with the US for complete exchange of all tax information between the two countries.

· Often due to foreign tax credits and the the foreign earned income exclusion expats living abroad  when filing  all past year unfiled tax returns and end up owing no or very little US taxes.

· Beginning in 2011a new law is in effect which requires all US Citizens report all of their world wide financial assets if in total the value of those assets are $50,000 (and this may vary depending on your filing status) or more on form 8938.  Read more about the rules here.

· Income from certain types of foreign corporations are immediately taxable on the US shareholder's personal income tax return.  If your corporation only provides your personal services to customers you may have a Foreign Personal Holding Company which would cause all income to be immediately taxable to you. Income may also be immediately taxable when the income is from investments, rents, etc. This is call “Subpart F” income.

· If you own investments in a foreign or Mexican corporation or own a foreign mutual fund shares you may be required to file the IRS forms for owning part of a Passive Foreign Investment Company (PFIC) or incur additional, taxes and penalties for your failure to do so. A PFIC is any foreign corporation that has more than 75% of its gross income from passive income or 50 percent or more of its assets produce or will produce passive income.

· The IRS is now matching up your US passport with your US tax records and knows if  you  have not been filing all required US tax returns while you are living  Abroad.  The IRS will shortly start matching up information received from Foreign Banks with US tax returns and required FBAR forms. If you have not been reporting, now is the time to start.

· Download your 2011 US tax return questionnaire prepared expressly for Americans living in  Mexico HERE.  Our rates begin at $350 and up for returns claiming the foreign earned income exclusion and $250 and up for retirees living in Mexico not claiming that exclusion.

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 Don  D. Nelson, CPA, Attorney (Kauffman Nelson LLP) has been assisting US Citizens , Permanent Residents and nonresidents in over 40 countries around the world with their US tax planning, tax return preparation, and other tax / legal matters for 20 plus years. He offers his clients attorney-client privilege which is not available from other tax accountants. He has helped hundreds of US expatriates around the world “catch up” filing their past late returns most often with little or no tax cost to you the delinquent taxpayer. His main office is at 34145 Pacific Coast Highway #401, Dana Point, California 92629 USA.

• Visit our websites at www.TaxMeLess.com  or  www.expatattorneycpa.com .
• Email Don at ddnelson@gmail.com.
• US Phone 949-481-4094 or US fax 949-218-6483.
• Don's skype name is: dondnelson.

Our Tax Services Include

• US Expatriate and International Tax Return Preparation for Americans in Mexico
• US Nonresident return preparation for Mexican Citizens
• Review of IRS International Tax Forms Prepared by you or your tax preparer.
• Preparing and filing tax returns for past years – Our “Catch Up” tax service.
• Surrender of US Citizenship or Green Card Tax Planning and Assistance.
• International Business Tax Planning for Mexico and compliance.
• IRS Offshore Voluntary Disclosure Reprsentation and filing.
• IRS Audit Representation with respect to Expatriate and International Tax Issues

Mini Tax Consultations are available for you to discuss your situation with Don your personally and secure his counsel resolving your tax problems and future tax planning by phone or email. No personal visit is required. All consultations are subject to the absolut privacy and confidentiality of Attorney-client privilege. LEARN MORE HERE.

Mexican Citizens and other nonresidents with Assets in the US are Subject to US estate taxes

Mexican Citizens and other nonresidents with certain assets located in the United States will cause their estates to have to file US Estate Tax returns on the value of their assets (with some exceptions) located in the USA. The tax is based on the Fair Market Value of their Assets and can be up to 35%. Nonresidents only get an exemption from this tax equal to the first $60,000 value of their US estate. The balance  of the estate's assets are subject to the estate tax.  Real estate which was owned by a deceased nonresident is subject to this tax.  The estate can only deduct the mortgage balance due from the fair market value if the estate agrees to report to the IRS the value an details of the decedents worldwide assets including those in Mexico.

Due to the large chunk this estate tax can take out of a nonresident's estate, it is best to do some advance planning to attempt to reduce it.  Email us if you want help. Read more about the nonresident  estate tax here

IRS INTERNATIONAL TAX EVASION STATUS

WASHINGTON — The Internal Revenue Service continues to make strong progress in combating international tax evasion, with new details announced today showing the recently completed offshore program pushed the total number of voluntary disclosures up to 30,000 since 2009. In all, 12,000 new applications came in from the 2011 offshore program that closed last week.

The IRS also announced today it has collected $2.2 billion so far from people who participated in the 2009 program, reflecting closures of about 80 percent of the cases from the initial offshore program. On top of that, the IRS has collected an additional $500 million in taxes and interest as down payments for the 2011 program — a figure that will increase because it doesn’t yet include penalties.
“By any measure, we are in the middle of an unprecedented period for our global international tax enforcement efforts,” said IRS Commissioner Doug Shulman. “We have pierced international bank secrecy laws, and we are making a serious dent in offshore tax evasion.”
Global tax enforcement is a top priority at the IRS, and Shulman noted progress on multiple fronts, including ground-breaking international tax agreements and increased cooperation with other governments. In addition, the IRS and Justice Department have increased efforts involving criminal investigation of international tax evasion.
The combination of efforts helped support the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which ended on Sept. 9. The 2011 effort followed the strong response to the 2009 Offshore Voluntary Disclosure Program (OVDP) that ended on Oct. 15, 2009. The programs gave U.S.taxpayers with undisclosed assets or income offshore a second chance to get compliant with the U.S. tax system, pay their fair share and avoid potential criminal charges.
The 2009 program led to about 15,000 voluntary disclosures and another 3,000 applicants who came in after the deadline, but were allowed to participate in the 2011 initiative. Beyond that, the 2011 program has generated an additional 12,000 voluntary disclosures, with some additional applications still being counted. All together from these efforts, taxpayers came forward and made 30,000 voluntary disclosures.
“My goal all along was to get people back into the U.S. tax system,” Shulman said. “Not only are we bringing people back into the U.S. tax system, we are bringing revenue into the U.S. Treasury and turning the tide against offshore tax evasion.”
In new figures announced today from the 2009 offshore program, the IRS has $2.2 billion in hand from taxes, interest and penalties representing about 80 percent of the 2009 cases that have closed. These cases come from every corner of the world, with bank accounts covering 140 countries.
The IRS is starting to work through the 2011 applications. The $500 million in payments so far from the 2011 program brings the total collected through the offshore programs to $2.7 billion.
“This dollar figure will grow in the months ahead,” Shulman said. “But just as importantly, we have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”
The financial impact can be seen in a variety of other areas beyond the 2009 and 2011 programs.

• Criminal prosecutions. People hiding assets offshore have received jail sentences running for months or years, and they have been ordered to pay hundreds of thousands and even millions of dollars.
• UBS. UBS AG, Switzerland's largest bank, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.

The two disclosure programs provided the IRS with a wealth of information on various banks and advisors assisting people with offshore tax evasion, and the IRS will use this information to continue its international enforcement efforts.

MEXICAN FIDEICOMISO PROPERTY OWNERSHIP BY US TAXPAYERS – WHAT ARE THE IRS FILING REQUIREMENTS?

By Don D. Nelson, Attorney at Law, C.P.A.

If you own your Mexican real estate through a Fideicomiso you have a yearly U.S. Tax filing obligation with the IRS.  There are  two informational forms which must be filed each year by  Fideicomisos which have been deemed to be foreign trusts.   These filing requirements are set forth below:

•    Form 3520A is due on March 15th following the end of each calendar year. The due date of this form can be extended for six months if the extension is filed before the due date..  None of the Banks in Mexico who act as trustee will file this form for your as required by US tax law.  Therefore, you must file it yourself since it is you the IRS will penalize if it is not filed. There is a penalty of 5% of the value of the assets in the trust for failing to file this form. This penalty can be waived for resonable cause. The form contains information on the Fideicomiso, its beneficiary(ies), its income and expenses, and the value of its assets, etc.

•    Form 3520 is due on the extended due date of your personal tax return. However it is filed separately from your personal return. Failure to file this form can result in a penalty equal to 35% of the value of the Mexican real estate  transferred to  the Fideicomiso. This penalty is currently waived if you provide the IRS with a reasonable late filing excuse.  This form mostly duplicates the same information contained in the form 3520A the addition of other informational items.

•    The Fideicomiso must secure a US Federal ID number from the IRS.  The ownership of all US owners must be reported.

•    If you the property you own in your Fideicomiso has been your primary personal residence for 2 out of the past 5 years, and you filed jointly with your spouse, the first $500,000US  ( $250,000US if you are singled) can be exempt on your US tax return.  You can claim a foreign tax credit for taxes paid on your sales gain in Mexico against your US tax on any gain on the sale in excess of the exemption amount.

•    If the property in your Fideicomiso is a rental, you must report the income and expenses on of the rental on your US tax return.  You must  depreciate the value of the improvements and structure on the property over a 40 year period.  Keep in mind that you must also file and pay income and IVA taxes on your rental income in Mexico or risk problems with the Hacienda.

In the past year several attorneys have written articles analyzing the IRS foreign trust filing requirements and have expressed their opinion that a Fideicomiso is not a foreign trust and should not have to file Form 3520 and 3520A. That is good theory, but does not reflect the position of the IRS.  Unfortunately the  Fideicomiso document is worded  as a foreign trust, holds title to the property in your behalf, and is administered by the Mexican Bank trustee. The IRS has never issued any pronouncement in  writing  that exempts Fideicomisos from filing the forms. Representatives of the IRS have indicated that it does not  have any plan to exempt Fideicomisos from filng these forms. Therefore, if you chose not to file you are at risk of  being assessed the high penalties for nonfiling as set forth previously.

If you own your Mexican real estate through a Mexican corporation you are required to file Form 5471 each year with your US income tax return. This form reports various information on the shareholders, income and expenses, and assets and liabilities of the corporation and the property it holds.  Failure to file this form on filing it late can result in a $10,000 per year penalty.  If you have a reasonable excuse for late filing that penalty is currently usually waived, though this policy may change in the future.

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Don D. Nelson is a U.S. Attorney and C.P.A.  who has been assisting US Citizens who live, work or own property in Mexico with their US tax  return filing requirements  and tax planning for over 20 years.  He is a recognized US international and expatriate tax expert.  In the past six years he has assisted a large number of Americans file their Fideicomiso US Tax Forms and has been  to date very successful in helping all of them avoid any penalties for filing past years or filing late.

No  need to visit his office. All services and return preparation is provided to clients by phone, email, fax and the internet. Contact him if you need assistance filing the required Fideicomiso US Tax forms.  Most accoutants and tax preparers do not understand these forms or know they exist. Since the forms are not filed with your personal tax return, they can be prepared and filed separately from that return.  Our if you wish, we can prepare all of your US and state income tax forms.

 Visit Don' websites at www.TaxMeLess.com & www.ExpatAttorneyCPA.com  Email: ddnelson@gmail.com   US Phone (949)481-4092.

For the lastest developments and news concerning US and Mexican taxes visit his blog at www.us-mexicantax.blogspot.com