Va&Social Security disability pay,still taxed after the 183 day rule?

Hello there,

So , I was reading in a post recently about taxation in Colombia. My pay isn't considered income in United States is considered a benefit and is called Va disability pay. I am a disabled veteran and considering moving to Colombia for a while with my wife and two daughters, I just love Colombia so much! 
Also, I receive Social Security disability pay , those two benefits aren't considered taxable income in United States so they aren't taxed here because I am disabled.

Where can I please found the right information about this ? Thanks!

any1973 :

My pay isn't considered income in United States is considered a benefit and is called Va disability pay.

You appear to be on the wrong track.

U.S government disability pay is a benefit, yes.  It may not be taxable in the U.S.  It is not earned income.

However, it is income. 

Don’t hide any of your income from Colombia tax authorities unless following advice from a Colombia attorney or qualified tax adviser.

cccmedia from La Zona Cafetera.

"Some types of income are exempt from income tax, including ... Social Security benefits.”

  -- article on taxation in Colombia at expatfocus.com

Whether disability income is taxed in Colombia was not discussed.

  -- cccmedia in La Zona Cafetera

Post removed by poster to avoid duplication.

I would be wary of the information presented by expatfocus.com.  For instance they say here:
http://www.expatfocus.com/expatriate-colombia-taxation

"The first 1090 pesos of income is considered to be tax free."

That isn't even close.  They do not appear to understand at all the concept of the UVT.  They also do not get the period right to be considered a tax resident of Colombia - they say it's six months in a calendar year when it's actually 183 days or more in any 365 day period.

Further, sources such as gerencie.com and DIAN government sites stipulate that Colombian pensions of Colombians are not taxed, but foreign pensions are taxed both for Colombians and foreigners who are tax residents.

From
http://www.gerencie.com/tratamiento-de- … ombia.html

"Dicha norma no hace distinción alguna sobre si la pensión es extranjera o colombiana. Sin embargo, la DIAN mediante oficio 58213 de 2014 deja claro que en el caso de las pensiones extranjeras, las mismas se encuentran gravadas en su totalidad en Colombia."
(in the case of foreign pensions, the same are taxed in their totality in Colombia)

See also this article "DIAN ratifica que pensiones de jubilación obtenidas en el exterior no se pueden restar como exentas"  (DIAN confirms that retirement pensions obtained in the exterior cannot be deducted as exempt)
from
http://actualicese.com/actualidad/2014/ … o-exentas/

About the first 1090 pesos of income supposedly being tax free....

1090 pesos is only about 37 cents U.S.

You say that’s not even close.

What is your understanding, Brother Archer, about the correct amount that is excluded from tax obligation in Colombia off the top?  What is your source for this number?

cccmedia in La Zona Cafetera

OsageArcher :

I would be wary of the information presented by expatfocus.com....

sources such as gerencie.com and DIAN government sites stipulate that Colombian pensions of Colombians are not taxed, but foreign pensions are taxed both for Colombians and foreigners who are tax residents.

From
http://www.gerencie.com/tratamiento-de- … ombia.html

"Dicha norma no hace distinción alguna sobre si la pensión es extranjera o colombiana. Sin embargo, la DIAN mediante oficio 58213 de 2014 deja claro que en el caso de las pensiones extranjeras, las mismas se encuentran gravadas en su totalidad en Colombia."

See also this article "DIAN ratifica que pensiones de jubilación obtenidas en el exterior no se pueden restar como exentas"  (DIAN confirms that retirement pensions obtained in the exterior cannot be deducted as exempt)
from
http://actualicese.com/actualidad/2014/ … das-en-el-

A full year (aside from leap years) being 365 days, half a year is technically 182.5 days.  Ipso facto, six months can be considered 182.5 days give or take half a day.

I don’t see expatfocus.com being incorrect on this point since we don’t quibble over such a trifle.

----------

Expatfocus may or may not be a good source for tax information in Colombia.  But, Brother, you have not yet disproved their credibility with what you posted in English.

As for the highly relevant passages you posted in español....

I invite you to translate into English the last paragraphs of your post .. to aid us in understanding.  IMO, the paraphrase you provided at the back end is not sufficient to clarify the facts of this important point.

cccmedia in La Zona

I believe the 1090 comes from tax laws of some years ago, where income up to 1090 UVT was not taxed.  The UVT peso amount can change each year, to have a system whereby adjustments are more easily made for inflation and cost of living, and to raise and lower tax rates and brackets without having to specify peso amounts - everything is indexed to the UVT (Unidad de Valor Tributario, or Unit of Tax Value).

For 2016 this article talks about UVT and the marginal tax brackets, scroll about halfway down:
https://en.wikipedia.org/wiki/Taxation_in_Colombia

For 2016 1 UVT = 29,753 COP
Income from 0 to 1400 UVT is not taxed.
Income greater than 1400 UVT up to 1700 UVT is taxed at a 19% rate.
Income greater than 1700 UVT up to 4100 UVT is taxed at a 28% rate.
Income greater than 4100 UVT is taxed at a 35% rate.

The above incomes in UVT are annual amounts - so 1400 UVT is a bit over 41 million COP or almost 3.5 million COP/month. This is liable to change to impose higher taxes for 2017 however with the tax reform, which will also be adjusted to tax incomes below 3.5 M COP which now are not subject to income tax.

So, doing the math using a rate of 1 USD = 3000 COP and solving for approximate monthly income amounts in USD:
Income from 0 to $1157 is not taxed.
Income greater than $1157 up to $1405 is taxed at a 19% rate.
Income greater than $1405 up to $3389 is taxed at a 28% rate.
Income greater than $3389 is taxed at a 35% rate.

You miss the point of calendar year versus a 365 day period.

The site in question - or as I would put it, the questionable site - says a tax resident is someone who spends at least 180 days in Colombia during a calendar year from January to December.

The Colombian government disagrees - they say a tax resident is anyone who spends 183 days or more in Colombia in any 365 day period regardless of calendar year.

The distinction is important - details matter!  Especially when you're talking taxes and money.

I would say that alone, plus their declaration that only the first 1090 pesos of income is tax-exempt, make their information suspect at the least and just plain wrong in the particulars, showing that whoever wrote that article has no real understanding of the topic.

Herewith follows the paragraph in Spanish and my translation.  I do not always do word-for-word, or thought-for-thought, but a mixture, trying to get the true meaning.  For instance I might translate "De la mano a la boca, se pierde la sopa" not as the word-for-word "From the hand to the mouth, you lose the soup" but instead something like "There's many a slip 'twixt the cup and the lip"...nevertheless the translation here is pretty straightforward.

"Dicha norma no hace distinción alguna sobre si la pensión es extranjera o colombiana. Sin embargo, la DIAN mediante oficio 58213 de 2014 deja claro que en el caso de las pensiones extranjeras, las mismas se encuentran gravadas en su totalidad en Colombia."

"Said rule makes no distinction whatsoever on whether the pension is foreign or Colombian.  Nevertheless, the DIAN by means of official document 58213 of 2014 makes clear that in the case of foreign pensions, the same are taxed in their totality in Colombia."

You can find a discussion of said official document here:
http://actualicese.com/normatividad/201 … 0-10-2014/

In any case I would advise consulting a reputable Colombian tax attorney rather than any advice given in an internet forum.

One more thing make sure you tell your bank your going to be in colombia. I went told mine and still had my atm card stopped twice.

OsageArcher :

You miss the point of calendar year versus a 365 day period.

The site in question - or as I would put it, the questionable site - says a tax resident is someone who spends at least 180 days in Colombia during a calendar year from January to December.

Since my first trip to Colombia dating back to 2016, I will have spent over 183 days in Colombia in the current 365-day period that began on June 18, 2016.

However, I have no expectation of actually being taxed as a resident for 2016.

Technically, I could be considered a tax resident for June 21, 2016-June 20, 2017.  But that doesn’t mean I will owe taxes for 2016, as I was in Colombia for fewer than 183 days in 2016.  The tax year is January 1-December 31.

cccmedia in La Zona

Well Colombia looks like a horrible place for retirees.

@dcasanares:

1.  Then why, in your profile, are you still saying you want to move to Barranquilla?

2. Are you basing your unsupported putdown on the fact that Colombia's tax rules are complex?

3.  Have you visited Colombia?  Or is your assessment of Colombia as "looks horrible for retirees" based on what you've read on online forum(s)?

I dispute your assessment of Colombia.  With you being admittedly in the initial stages of looking for a retirement haven, you have not shown credible reason(s) for your conclusion ("looks horrible for retirees") on a public forum in which others are considering Colombia.

cccmedia in La Zona Cafetera

Sorry, I am confused.  Will I have to pay a Colombia tax on my US Social Security?  I plan on coming in on a retirement visa (M-11) using the Social Security to prove I am eligible for the M-11.  And if I have to pay, roughly what percent is it?  I only plan on renting, not buying any property.

If you spend more than 183 days total in Colombia in any 365 day period you are considered to be a tax resident.

If you are a tax resident and your world-wide income exceeds 41,654,000 COP per year (about 14,313 USD at today's exchange rate), you must file a tax return, a declaración de renta.  This amount is subject to adjustment each year.  No matter what the US considers your Social Security, Colombia considers it as income.

I can't tell you what percent of your income you'll pay.  Their system is like that of the US - the more you make, the more you pay, and it is "progressive" using marginal tax rates meaning the percent you pay goes up the more you make.

The tax rates start at lower levels of income and are higher, compared to the US.  The rates have recently changed with the new tax laws, to tax people with lower incomes.  So these figures are approximate and may now be higher:  Anything you make over about 1200 USD/month is taxed at a 19% rate, anything over about 1700 USD/month is taxed at a 28% rate, and anything over about 3200 USD/month will be taxed at a 33% rate.

But there are deductions you may take - for the tax you may have paid in the US, and for other conditions that a competent Colombia tax specialist may be able to find.   You may find that you owe no Colombia taxes at all.

The only way to find out is to consult a Colombia tax professional about your specific situation.

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