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Mexican Income Taxes For Permanent Residents

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Mexican Income Taxes For Permanent Residents

Post by NCJAMES on Sat Jun 17, 2017 9:32 am

I have seen two different viewpoints on this subject. One is that American expats in Mexico who work for an American company do not pay income taxes on their salary. They would only pay taxes on income earned from a Mexican company or self-employment, rental income, interest etc. earned in Mexico. Another viewpoint states that you must report all worldwide income but will get a credit for taxes paid to other countries. Which one is correct? Also, if you are retired and living in Mexico on social security and retirement savings only from the U.S. , are there any income tax implications.

One last question. Is the only benefit to becoming a permanent resident in Mexico the free government health insurance? I am considering moving to Aiijjic, but would purchase private health insurance. So, would their be any advantages for me to apply for permanent residency?

Thanks!

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Re: Mexican Income Taxes For Permanent Residents

Post by RVGRINGO on Sat Jun 17, 2017 10:04 am

Your information is very confused. Please review your sources and read them very carefully.
If you are paid in the USA, you will be taxed in the USA.
If you are paid in Mexico, you will be taxed in Mexico & still report to IRS.
You may work in Mexico with Residente Permanente visa. Notify INM.
Residente Permanente may not have a US or other foreign vehicle.
Residente Permanente may join Seguro Popular; not always free.
Private health insurance may be unavailable to elders or those with pre-existing conditions; so, check policy details very carefully. Routine care will generally be out of pocket, rather than insured.

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Re: Mexican Income Taxes For Permanent Residents

Post by CanuckBob on Sat Jun 17, 2017 10:43 am

Also, sticking with a tourist visa (FMM) requires you to leave the country every 6 months to apply for another one.

Canada has a tax treaty with Mexico which means if you pay income taxes in Mexico you don't have to pay in Canada as well. Does the US have a similar agreement RV?

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Re: Mexican Income Taxes For Permanent Residents

Post by RVGRINGO on Sat Jun 17, 2017 2:32 pm

Yes, the USA does, and you are not taxed twice.

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Re: Mexican Income Taxes For Permanent Residents

Post by CanuckBob on Sat Jun 17, 2017 2:57 pm

Excellent. Another good reason to live in Mexico if you are planning on living and earning abroad.

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Re: Mexican Income Taxes For Permanent Residents

Post by Captnflex on Sun Dec 24, 2017 12:46 pm

Hi, more specific to Canadian:
I am planning to retire and looking at different option, one of them is retiring in Mexico and filing to be a permanent resident.
Most on my revenu will come from a registered pension plan and Quebec pension plan (same as Canada pension plan), same for my wife.
According to Canada revenue agency, we will pay only 15% (on pension payment) as Canadian Non resident because Mexico has a bilateral tax treaty.
So my question by becoming permanent resident in Mexico will we need to file an income tax report for Mexico?
If yes what are the tax rates on pension payments (website?)? (If more than 15% we get credited for what we paind in Canada)
If we do have some other revenu (offshore mutual fund) do we need to declare them to Mexico?

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Re: Mexican Income Taxes For Permanent Residents

Post by slainte39 on Sun Dec 24, 2017 1:07 pm

Does your "American company" have a Mexican domicile, as that would be the determining factor as to where your employer is for your personal income tax (US) or ISR (Mex), as to who you would pay first and the receive a tax credit from the other country.
IOW, does your employer show you employed by them, the employer,  being in Mexico, as well as you, the employee, being in Mexico.

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Re: Mexican Income Taxes For Permanent Residents

Post by CanuckBob on Sun Dec 24, 2017 1:52 pm

If you become a permanent resident of Mexico you can apply to be a nonresident of Canada and you will no longer be required to file a tax return in Canada or Mexico. 15% will be with held at source. If you earn money "working" in Mexico you will need to pay Mexican taxes. Best to discuss this with a Mexican accountant.

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Re: Mexican Income Taxes For Permanent Residents

Post by conejorapido on Sun Dec 24, 2017 4:40 pm

Americans must report their worldwide income to the IRS on their returns each year. If you have paid taxes to a foreign country on any of that income, there is a foreign tax credit calculation that takes that into account. For professional information you should contact someone like Patrick Oden at the contact info in the link below. He's a straight shooter and knows the tax codes inside out and can reliably answer your questions better than most of us on this board!

https://www.taxbuzz.com/find-the-best-tax-preparer/chapala/patrick-oden

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Re: Mexican Income Taxes For Permanent Residents

Post by ferret on Sun Dec 24, 2017 5:26 pm

Read the DATES on threads please. This is from June of this year. The person resurrecting it today is Canadian and asked questions about Canadian non residency and becoming a permanent resident of Mexico.... and taxes.
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Re: Mexican Income Taxes For Permanent Residents

Post by RVGRINGO on Mon Dec 25, 2017 10:07 am

The simple answer:
If you make money in Mexico as a legal resident of Mexico, you must have an RFC and pay your taxes to Hacienda. Your accountant will take care of the details bimonthly.
There are tax treaties (between USA, Mexico, Canada,etc) which preclude paying double taxes, so that is not a concern.

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Re: Mexican Income Taxes For Permanent Residents

Post by Captnflex on Fri Dec 29, 2017 6:45 pm

Searching the net i found the info below:
Mexico taxes its residents on their worldwide income. So there’s more to the story than just the withholding tax in Canada. There is an exemption for pensions of up to nine times a region’s legal minimum salary making this amount exempt from tax. So depending on the region where your friend resides and her total pension income, she may be at least partially exempt from Mexican tax

source moneysense.ca/save/retirement/retiring-to-mexico-for-a-lower-tax-rate/

Minimum wage in Mexico i found to be 89MXN peson=6 CAD/day= about $2200 C$/year. X9 (exemption)= about $20,000. CAD$ per year.
Do anybody pay Mexico income tax on surplus of that exemption?
Yes you get credited the 15% witholding tax in Canada on pension.
Did anybody check with a Mexican tax expert as with the bilateral agreement Canada and Mexico do exchange information.
I just want a clear picture before making the move and not have to pay back taxes in 5 years.

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Re: Mexican Income Taxes For Permanent Residents

Post by Captnflex on Fri Dec 29, 2017 7:00 pm

Last update: December 27, 2017

25% Withholding Taxes on RRIF’s and other Income for Non-Residents
In 2012, CRA ("Revenue Canada" to us older folks) began advising Canadian financial institutions to take 25% withholding tax on RRIF, LIF, pension and similar payments to Canadian Non-Residents living in Mexico, instead of the lower 15% as allowed by the tax treaty between Mexico and Canada. The solution is to file a Declaration of Eligibility (form NR301) for the lower 15% rate. The NR301 must be filed with your financial institution, not with CRA directly. You should also know that the NR301 needs to be filed every three (3) years…so don’t forget to set up a system whereby you file the form on time, every time.

source tiocorpinsurance.com/index.cfm/canadians-in-mexico/mexico-taxation/

f you are caught in a situation whereby your bank or investment house has taken 25% withholding taxes instead of 15%, you will have to file an NR7-R request for a refund of over-payment of taxes, and perhaps file a Canadian Income Tax Return under Section 217 of the Income Tax Act in order to get a refund. If this applies to you and you need help, TioCorp can arrange for your Canadian Non-Resident Income Taxes to be filed. The deadline for a Section 217 Income Tax Return is June 30th each year.

source tiocorpinsurance.com/index.cfm/canadians-in-mexico/mexico-taxation/

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Re: Mexican Income Taxes For Permanent Residents

Post by David on Fri Dec 29, 2017 7:11 pm

You only pay income tax to Hacienda if you earn $ in Mexico. Pension income is not "earned income." Canada pensions are taxed only by Revenue Canada.
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Re: Mexican Income Taxes For Permanent Residents

Post by ferret on Fri Dec 29, 2017 7:30 pm

Captnflex wrote:Searching the net i found the info below:
Mexico taxes its residents on their worldwide income. I just want a clear picture before making the move and not have to pay back taxes in 5 years.

This statement is NOT true. Mexico taxes its CITIZENS on their worldwide income... as do most other countries in the world. It is the reason that although I am a Residente Permanente that I did not become a citizen of Mexico.
You have to APPLY for non resident status in Canada to be declared a non resident.
I would suggest you search the net on the Canadian Government websites to find out how to do that, whether you're eligible (like no property in Canada and you have to give up your health care etc.). I have not found TioCorp to be totally knowledgeable about this. YMMV.
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Re: Mexican Income Taxes For Permanent Residents

Post by Captnflex on Sun Dec 31, 2017 8:48 pm

Thank you, i will do more reading on this  

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Re: Mexican Income Taxes For Permanent Residents

Post by DaveP on Tue Jan 02, 2018 2:10 pm

Captnflex wrote:Last update: December 27, 2017

25% Withholding Taxes on RRIF’s and other Income for Non-Residents
In 2012, CRA ("Revenue Canada" to us older folks) began advising Canadian financial institutions to take 25% withholding tax on RRIF, LIF, pension and similar payments to Canadian Non-Residents living in Mexico, instead of the lower 15% as allowed by the tax treaty between Mexico and Canada. The solution is to file a Declaration of Eligibility (form NR301) for the lower 15% rate. The NR301 must be filed with your financial institution, not with CRA directly. You should also know that the NR301 needs to be filed every three (3) years…so don’t forget to set up a system whereby you file the form on time, every time.

source tiocorpinsurance.com/index.cfm/canadians-in-mexico/mexico-taxation/

f you are caught in a situation whereby your bank or investment house has taken 25% withholding taxes instead of 15%, you will have to file an NR7-R request for a refund of over-payment of taxes, and perhaps file a Canadian Income Tax Return under Section 217 of the Income Tax Act in order to get a refund. If this applies to you and you need help, TioCorp can arrange for your Canadian Non-Resident Income Taxes to be filed. The deadline for a Section 217 Income Tax Return is June 30th each year.

source  tiocorpinsurance.com/index.cfm/canadians-in-mexico/mexico-taxation/

Who is doing the Canadian Taxes at TioCorp? What is the process?

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