How are income tax refunds from the U.S. handled in declaracion

Member since 21 September 2023

uknwn0424Member04 October 2023 00:10:40

For those who have filed a declaracion de renta before and have received tax refunds after filing your U.S tax return, how were the refunds handled in your declaracion? For example, if in the tax year, you paid 50k USD in taxes and are due a 10k refund, does you declaracion say you paid 50k (converted to pesos) or does it say 40k? I ask because technically we don't get our refunds till the following year (e.g., pay taxes in 2022 and receive 2022 refund in 2023), so it seems like you can discount the full 50k in the declaracion as taxes paid to the U.S....though I'm not sure if you would need to treat the 10k refund as income for the following year or if it doesn't need to be declared at all. Lol the latter seems unlikely because if you take the foreign earned income exclusion and foreign tax credit, you'd essentially pay no taxes (or very little) to either country.

I'm going to ask my accountant about this, but was curious about what others have been told.

nico peligro Serial expat

Member since 18 September 2020

nico peligroSerial expat04 October 2023 11:36:10

920

People sure worry about wierd stuff

uknwn0424 Member

Member since 21 September 2023

uknwn0424Member04 October 2023 14:53:14

@nico peligro Worry? More like hope. Weird? Maybe. Lol Idk if I'd consider it weird. If there's a legal precedent for not having to declare refunds, you can essentially live tax-free (depending on your salary) without having to go to some other country every 6 months. For me, an extra 25-40k in my pocket sounds pretty nice...but maybe being hopeful is weird because it's too much to hope for.

nico peligro Serial expat

Member since 18 September 2020

nico peligroSerial expat05 October 2023 02:54:41

920

I know multi-millionaires living in Colombia for most of the year for 10 plus years who either dont do Declaración de Rentas, or dont report any foriegn income on them,or at least not the real number.

More details you give them, the more they will hassle you.