Taxes

I recently moved to Tijuana work In San Diego with a Mexican tourist visa about to apply for a temporary residence permit from Mexico how will I handle taxes o make about 50k per year?

Lou1216 :

I recently moved to Tijuana work In San Diego with a Mexican tourist visa about to apply for a temporary residence permit from Mexico how will I handle taxes o make about 50k per year?

If you do not make money in Mexico you don't owe taxes to Mexico. So the tax issue is with the U.S.  If you have a very large amount ( over 10 thousand U.S.) of money in a Mexican interest paying bank  , that complicates the tax issue.
Of course if you recently flew into Mexico you might have heard or seen that number on declaration forms.

I am no tax expert, but have been checking this issue for my own personal consumption.  Here's my understanding.  You only pay Mexican taxes on what you earn in Mexico.  You will pay US Federal taxes.  You might not have to pay California state income taxes if you can show you have little or no ties to CA.  CA doesn't really care where you live if you own property in CA, have a bank account in CA, register your cars in CA, or have a CA driver's license you will probably have to pay CA income taxes.  We have two rental properties in CA and plan to live in Mexico at least 6-10 months out of the year and travel to visit grandkids the remainder.  I don't want to give up my CA DL or hassle with re-reg my cars, so I am pretty much stuck paying CA income taxes.  We are considering applying for the permanent resident.  But I don't want to give up my SENTRI pass, which I think I have to have a US address to keep it.

jamesr3939 :

I am no tax expert, but have been checking this issue for my own personal consumption.  Here's my understanding.  You only pay Mexican taxes on what you earn in Mexico.  You will pay US Federal taxes.  You might not have to pay California state income taxes if you can show you have little or no ties to CA.  CA doesn't really care where you live if you own property in CA, have a bank account in CA, register your cars in CA, or have a CA driver's license you will probably have to pay CA income taxes.  We have two rental properties in CA and plan to live in Mexico at least 6-10 months out of the year and travel to visit grandkids the remainder.  I don't want to give up my CA DL or hassle with re-reg my cars, so I am pretty much stuck paying CA income taxes.  We are considering applying for the permanent resident.  But I don't want to give up my SENTRI pass, which I think I have to have a US address to keep it.

Hi, old quote "you can't have it both ways"

Basically, you must pay taxes in the place you live normally but you have to pay taxes on all your worldwide income.

Adios, GyC.

I don't mind paying my fair share, but CA seems to want more than that.  #2 reason we are moving to Mexico.  Since I am not living in CA I am not using CA services so shouldn't have to pay state taxes.  I still pay county and city property taxes on my rental to support local infrastructure.  I think that's fair! 

Since I have kids living in Texas and Arizona I might just use their addresses or get a drop box.  Funny thing is I can still keep my CA DL and car reg with CA even with an AZ or TX address.  CA doesn't care where I live as long as they get their money.

mexicogc :

Basically, you must pay taxes in the place you live normally but you have to pay taxes on all your worldwide income.

Adios, GyC.

Not totally accurate, if you stay outside the US for more than 330 days you don't pay US federal taxes on income earned outside the US.  There is an upper limit but I can't recall it.  I had friends who worked as contractors to the US State Department in Iraqi and their income was US tax exempt.

mexicogc :

Hi, old quote "you can't have it both ways"

Basically, you must pay taxes in the place you live normally but you have to pay taxes on all your worldwide income.

Adios, GyC.

Hi I hope this thread is still being monitored. I am very confused on this issue.
As stated here, I understood Mexico to tax worldwide income, however I have asked some expats living in Mexico and they are not taxed on their pensions, they also contacted someone in immigration and was told "Mexico will only apply taxes to Mexican sourced income. Income from outside of Mexico be it on-line, pensions etc is not taxed."

Any input appreciated....

Hi to all, I am not an expert but lets try to make it simple. The taxation process for the majority of country is based on residency status (so residents of Mexico should taxes on world-wide income but can apply fiscal treaties aspects).

People (persons) can have dual citizenship but can only be resident of one country at the end of a fiscal year.

My case a Canadian citizen with mexican permanent residency status (fulltime NOT snowbirding), paying taxes on all Canadian source pensions based on the fiscal treaty between Mexico and Canada. Since I don't have any mexican source revenue (work, internet work no matter the base, rental revenue, own real estate), I don't have to register with the RFC but they could ask questions and proof of revenue sources because I am a permanent resident of Mexico and have the status Non-resident for Canada. Almost all countries have a fiscal treaty except the ones that been in the news (NO fiscal treaty between Canada and Panama) those are often called fiscal paradise.

https://rfc.siat.sat.gob.mx/PTSC/RFC/menu/

So the best:

Check if there is a fiscal treaty between your revenue source country and your residency country
Call the taxation office were you reside and your revenue source country to make sure you comply
Contact an international fiscal accountant

Here is an exert from the following site:
http://www.sars.gov.za/About/SATaxSyste … fault.aspx

Exert:
Non-residents are, however, taxed on their income from a South African source. Foreign taxes are offset against South African tax payable on foreign income

So bottom line:

Some people forgot to check all aspects before moving as a permanent resident to Mexico. Like at school, we have homework to do.

Other article:
http://www.escapeartist.com/mexico/live … ts-mexico/

Adios y buen dia a todos, GyC

Thanks mexicogc..
You're right, doing homework is very important.. which is why I'm here!
I appreciate the input.
Regards

I have read several sources and the only income that will be taxed in Mexico is income earned in Mexico.  Since, I don't plan to work in Mexico and only receive my US government pension I will not be taxed on it by Mexico. 

However, I do plan to apply for permanent resident status, which requires I show a source of income.  Once I apply that will be a question for them also.  But all my research shows you are not taxed on income earned outside of Mexico. 

In my case I still have to file and pay US federal taxes and CA state taxes, unless I move my US residence to another state without state taxes, which is becoming a high possibility.  As near as I can determine there is no way to avoid US federal taxes unless you are willing to renounce your citizenship and establish residence in another country where you are a citizen.

The only limited exemption to US federal tax paying is what I posted prior.  If you stay outside the US for more than 330 days, work outside the US, and are paid outside the US the first $80K-90K is US federal tax exempt.  As I recall my friends worked for a foreign based company that contracted to the US DoS and they were paid in accounts set up in London.  They could not come back to the US for at least 330 days to stay US tax exempt.  The IRS has an entire publication (of course they do) on the regulation.

Yes, that is pretty much it. There is an agreement between other countries and the U.S. Basically the U.S. gets taxes on all monies earned from the U.S. The foreign country only gets taxes paid on money earned in that country.

Hi folks, thanks for the input.
What confuses me is that sites ranging form Wikipedia (less "authoritative") to PriceWaterhouseCoopers (as a firm of auditors I'd EXPECT them to be very authoritative!) all say that Mexico taxes worldwide income....

Maybe they mean income earned worldwide while working from Mexico, i.e.: internet sales, etc., which I believe will require you be in country on a work visa.     

I am 99% sure my pension is not taxed in Mexico.  Since I don't plan to have it deposited in a Mexican bank, maybe a small account to get pesos, there will be no record of  my income.

https://www.irs.gov/businesses/internat … -documents

This is a recent update to the IRS site.  Article 19 deals specifically with pensions.  If I read it correctly the agreement is pensions are taxed where they were earned.

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