Mexicoś income tax rates personal and corporate income earned in Mexico

Go the following link to read about Mexicoś personal income tax rates on individuals. 

Cabo San Lucas - a Tax Haven?

https://taxsummaries.pwc.com/mexico/individual/taxes-on-personal-income.

Mexican corporations pay a flat rate of 30% of net profit.

Most Mexico dividends and interest paid by banks are taxed at 10% which is the amount the payor withholds when that income is distributed to you.

Need further advice or return preparation  on your US taxes with respect to you rental, business or other income from Mexico?  Email us at 
Mexico -US tax informaton

PAYING TAXES ON MEXICAN RENTAL PROPERTY - FOR NONRESIDENT OWNERS

 Nonresidents of Mexico who own rental property there must pay Mexican income tax and in many

instances Mexican IVA (value added taxes) on their rental income.  Failure to do so can result in huge penalties when caught by the SAT (Mexican IRS).  If you rent out through VRBO or ARBNB they will

pay the taxe for you but if you have a long term rental or do short term rentals on your own, you must file the required tax returns. Now even those with FMM (tourist permits) can get an RFC (tax id number) so they can pay their Mexico income taxes. 

Read more about how Mexico rental taxes work here:http://rentaltaxmexico.com/

We have been assisting Gringos living and owrking in Mexico with their US taxes for over 20 years. Write us for more information:  Kauffman Nelson LLP, Certified Public Accountants  Email us for more information and assistance.

Register in the RFC as a natural person if you are a foreigner - Even if you only have a FMM (tourist visa)

Visit the SAT website to learn how to subscribe for an RFC as a fiscal person as a foreigner .  ( Learn more at SAT website: https://www.sat.gob.mx/tramites/97439/inscribete-en-el-rfc-como-persona-fisica-si-eres-extranjero  If you do not read Spanish use google to translate the webpage for you.   You must have this number if you rent out property you own in Mexico even though you do not have a temporary or permanent resident status.  Many Mexican banks and others are now requiring this number. The process securing an RFC tax number is complex and will require the assistance of a Mexican Notary.

If you rent your casa in Mexico you do own mexican income taxes on your rental income and in some situations Value Added taxes to the SAT (Mexican IRS). This number is required by the SAT.  If you rent through ARBNB or VRBO they have made arrangements to pay the tax for you though you do not have an RFC number and do not file a Mexican tax return.

If you do pay Mexican income taxes on your rental income you do get to claim it as a tax credit against the taxes you pay on your US Income Tax return on that rental income.  Yes your worldwide income MUST be reported on your US income.

How do Mexican rental taxes work?  Go to to learn how to properly handle your rental: http://rentaltaxmexico.com/  Failure to pay the tax can result in huge penalties and interest when the SAT finds you.

We have been helping Americans with their US taxes in Mexico for over 20 years and can help you with the complex international tax issues which may be involved.  We are US CPAs and Attorneys with over 20 years experience each in international taxation.  Email Don D. Nelson, Attorney at Law at ddnelson@gmail.com for more information and for assistance.

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.

Mexico IVA and Income Taxes Will be Witheld from Payments made to VRBO, ARBNB, by vacation rental renters

Mexico vacation rental through VRBO

The Hacienda or SAT has reached a deal with VRBO, ARBNB and other web based vacation rental companies to withhold Mexico income taxes and IVA from payments made by renters on vacation homes. If you are using one of these services to rent your property stating June 1, 2020, these taxes will be withheld from your rent receipts prior to the balance being remitted to you as the property owner.

When you rent out yourself or a long term rental  or do not use one of web vacation rental companies you still must pay rental income tax and the tenant must pay IVA which you must collect.  If you are a premanent resident and have an RFC number you must file a tax return monthly and if you are a nonresident who owns the real property rented in Mexico you need to use one of the services such as the Settlement Company to pay those taxes. The tax rates are different for residents with RFC numbers versus others. Read more about it here.

The good news is that you get a credit for the Mexico income taxes paid against the tax you pay in Canada or US on that rental income and get to deduct the IVA. If you need assistance claiming the credit email us.  Many US accountants do not know how to claim a foreign tax credit while we have been doing for our clients for over 30 years. Email Kauffman Nelson LLP  .....US CPAs

CHANGES COMING IN THE COLLECTION OF MEXICAN TAXES ON RENTAL INCOME!

It has always been necessary to declare and pay tax on any and all income generated

by rental of Mexican properties. No news there! What is new is that the Mexican tax

authorities are taking an aggressive stance in tax collection and are requiring all

technological platforms (think VRBO, AirBnB, etc) to withhold and pay tax from income

generated.

This new law is slated to take effect on June 1, 2020. Due to the slowdown from CO-

VID 19, regulations and procedure have not been published and this may delay things a

bit. It IS coming however! Be prepared! More details to be published in the Gringo

Gazette in the May 25 edition.  Also watch this blog for further information or write us at

ddnelson@gmail.com 

Covid Tax Return Deadlines and Other IRS and State Covid Tax Changes

Current government and IRS pronouncements are not clear whether the automatic extension of time to file your tax returns and pay taxes without penalties apply to US expatriates living and working abroad (normal tax return due date for expatriates is 6/15/20). This may be clarified in the future, but in the interim if you are an expatriate you may want to pay all taxes by 4/15/20 to avoid interest.

The automatic extension until July 15,2020 under the COVID tax bill does not currently appear to include an automatic extension of time to file certain special reporting forms such as 5471, 3520, etc. Therefore, it is best until this is clarified that you file an IRS extension request for any returns that include these forms or the forms by the previous regular due date.

1040-NR returns which were previously due on April 15 (i.e. if there were wages paid) those returns have been extended to July 15, 2020.

The recent COVID tax bill includes outright payments of amounts to each taxpayer if their 2019 earnings (or 2018 if 2019 has not yet been filed) do not exceed certain amounts. SEE THE EXACT RULES FOR THE PAYMENT

If you have not filed your US return for 2018 and 2019 yet, you may want to file them immediately so the stimulus payment referred to in the previous paragraph will be made to you. If you have not filed for 2018, no payment will be made. If you wait too long, the stimulus might not be available. Note that if your 2019 income is lower than 2018 you may want to file in order to show eligibility.

Whether tax income limits for these cash payments apply to your expatriate income after deducting the foreign earned income exclusion or before is not certain at this time

For those who file state returns, many states including California have extended the due date your 2019 state tax return to match the July 15, 2020 federal deadline. Many also do not require payment of the taxes due until that date.

Email our tax CPAs and Attorneys for assistance and with your questions.