Paying Taxes from Mexico, It's That Time of Year Again

If you have been living in Mexico in 2008 or if you earned income while in Mexico, chances are that the April 30th deadline for filing a Mexican tax return applies to you.

Income in Mexico is broadly defined and includes wages from an employer, income from personal services, rents, dividends, income and other items If you have received income, then it does not matter if you are considered a Mexico resident or non-resident, the law says you must file a return.

Requirements for residents are different There are several ways to determine whether or not you are a resident The easiest way is to see how much of the year you have spent in Mexico If you were here for 183 days or more, you are considered a resident You can also be considered a resident if you maintain your primary residence in Mexico or if you receive more than half of your income from Mexican sources When in doubt, the Mexican government will consider you a resident Bienvenidos!

Residents are required to pay taxes on their worldwide income, just as the US requires you to do This means that any income you receive from the US: social security, pensions, interest and so forth; will be taxed under Mexican law Similar to the US, you are allowed deductions for medical expenses, charitable deductions and the like You receive an exemption for the first MXN 125,000 Income from 125,000 to 1,000,000 is taxed at a 15% rate Above one million pesos, the rate is 30%.

If you need to file a tax return, http://www.sat.gob.mx/sitio_internet/asistencia_contribuyente/principiantes/eres_extranjero/78_9768.html for more information While many have neglected to pay taxes in the past, it might be wise to start paying attention to this issue As the economic situation worldwide has deteriorated, governments are eager to seek out additional tax revenues US President Barack Obama has been putting heavy pressure on Swiss and other European banks to release information on Americans with accounts there There is no telling what goverments may do to maximize their tax revenues should economies continue to deteriorate

Keep in mind that if you pay taxes in Mexico, as a US citizen, you must also file taxes in the US More about this issue in Part II If you would like to receive, free of charge, a comprehensive booklet describing the taxation of Foreigners living in Mexico, drop me a message or a quick note by CLICKING HERE (Mexico Real Estate Blog CONTACT US) along with any questions you may have I ll be more than happy to send it to you immediately and respond as best I can on any tax questions you may have.

Disclaimer: Please keep in mind that this writing is intended to provide you with high level information and is not intended to be considered as tax advice. Tax laws in most countries are complex. You should meet with your professional tax adviser to review your individual situation before acting on any suggestions made in this article.

Gary Lewis' ideas incorporate more than 30 years working with investments including 20 years experience in the deriviatives industry and 10 years as a fee-only comprehensive financial planner. He specializes in designing portfolios that meet the client s required rate of return with a minimum level of volatility.

Gary holds the CFP and ChFC designations and earned a Master of Management (MM) degree in finance from Northwestern University. He currently resides in Mexico City(512)-879-6546 www.TOPmexicorealestate.com

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