[Chippy]

The other thread on tax accountants prompted me to ask the following question: if US citizens become full time residents of Mexico and do not own real estate or cars in the US, and if you also move all of your money to a Mexican bank, would a citizen still have to pay US taxes under those conditions? I know that many US expats keep their bank accounts in the US while living full time in Mexico, and therefore still have to pay taxes in the US, but I wondered if you moved to Mexico full time but didn't keep any ties there (no $$, no cars, no real estate) would you still have to pay US federal taxes? I would think in that case you would pay taxes to the Mexican government, not the US. Is anyone doing this?

[Doolittle]

If you are a US citizen you must file a tax return regardless of where you live. If you have income in the US such as Social Security, pension, interest, and dividends you must pay US Income tax.

[Intercasa]

Here is some info from the IRS on the issue:

Tax Guide for U.S. Citizens and Resident Aliens Abroad

http://www.irs.gov/pub/irs-pdf/p54.pdf

[MountainGal]

Even if all of your income (investments, bank accounts, etc) comes from Mexico, you must still file a U.S. tax return and declare all income foreign and domestic. If you have investments in Mexico and they withhold Mexican taxes (ISR) you can report those payments on your tax return and should get some sort of credit for the taxes paid - hopefully the amount which offsets the taxes you owe to the U.S. I just went through the Turbo Tax program (Deluxe version, not Basic) and it did handle this information quite well. Better than last year in my opinion.

[Limey]

Removed....

[Chippy]

Good info. Thanks for the link to the relevant IRS publication.

[halw5739]

Unless you renounce US citizenship, you pay taxes no matter what. US in one of only two countries in the world that taxes their citizens on their world wide income.

[jimmiller]

It is such an honor to be a US citizen that you are subject to the US tax law your universal income. If you live and own a business on Alpha Centauri you must file a US tax return. Of course you might receive a credit for any taxes you pay to the Alpha Centaurians.

[michigander]

 If you live and own a business on Alpha Centauri you must file a US tax return. Of course you might receive a credit for any taxes you pay to the Alpha Centaurians.

The United States IRS never lets moss grow under it's feet! Any where, any place, any time. You will owe a tax or at least a document that shows you do not owe a tax!

[elpind]

What about state taxes? I know they will vary from state to state but what do all of you do?

[RVGRINGO]

If you use Turbotax Online, it takes care of both Federal and State tax returns automatically. If you use a local mailing service with a Texas address, there is no state income tax.

[MountainGal]

elpind, on 09 February 2010 - 09:25 AM, said:

What about state taxes? I know they will vary from state to state but what do all of you do?

Each state is different. For Colorado, we filed our final return for the year we moved (partial year). We had to enter the date we left and taxes were prorated based on the percentage of income while we were residents. On the Federal form you tell them you are a foreign resident.

[traderspoc]

Partial year tax returns, where you move out of the state during 2009 to mexico,the state your had partial state residence wants a share,

and if you do not file a partial return letting know you moved, they will be looking, for you to pay taxes next year.

also important to changes address and drivers license. Some states still consider you a resident if you have a drivers and a physical address in that state, If you put a state address on your federal return , the federal sends a transcript of your tax return to that state 1 year later or so.

lets say you only live 5 months in the state, well that state wants you to report five months of all your income recieved in that state.
so divide by 12 2400/12 =200 per month x 5= 1000 example if you earned 2400 for the full year 1000 is reported on the partial year return for 5 months residence. You have to do this for all your forms of income. interest, dividends, mutual fund capital gain etc.


if you have a question on filing partial year taxes call me H. WAYNE 766-1860
Remember the federal governement gets 100% of everything, so you have to do two totally different tax return calculations, it can be a challenge
if you are not used with the tax laws and tax software. some state tax you different when you used a partial year.

Some retiree moving to mexico specially if they moved at the end of the year, you may save money by doing a partial return, and taking all 12 months on it and stating that they moved in DEC. This way you all the full year resident credit. which may be limited on a split partial year tax return.

[jimmiller]

traderspoc, on 13 February 2010 - 12:40 PM, said:

Partial year tax returns, where you move out of the state during 2009 to mexico,the state your had partial state residence wants a share,

and if you do not file a partial return letting know you moved, they will be looking, for you to pay taxes next year.

also important to changes address and drivers license. Some states still consider you a resident if you have a drivers and a physical address in that state, If you put a state address on your federal return , the federal sends a transcript of your tax return to that state 1 year later or so.

lets say you only live 5 months in the state, well that state wants you to report five months of all your income recieved in that state.
so divide by 12 2400/12 =200 per month x 5= 1000 example if you earned 2400 for the full year 1000 is reported on the partial year return for 5 months residence. You have to do this for all your forms of income. interest, dividends, mutual fund capital gain etc.


if you have a question on filing partial year taxes call me H. WAYNE 766-1860
Remember the federal governement gets 100% of everything, so you have to do two totally different tax return calculations, it can be a challenge
if you are not used with the tax laws and tax software. some state tax you different when you used a partial year.

Some retiree moving to mexico specially if they moved at the end of the year, you may save money by doing a partial return, and taking all 12 months on it and stating that they moved in DEC. This way you all the full year resident credit. which may be limited on a split partial year tax return.

Much of what you say is wrong if your state is California. It's dangerous to generalize when so many jurisdictions are involved.

We maintain a California address and have California drivers licenses. But we do not file California tax returns and have cleared it with the state tax department. We also are not obliged to serve jury duty,that has also been cleared with the appropriate department in California. This all based on the number of days we spend outside of the state.


Check with your individual state-each state makes its own rules and results may vary.

[solajijic]

In Ohio we were told by financial advisor tax guy to file statement with the Sec'y of State that we were moving out of the country and not to another state in order to eliminate the next years tax obligation to Ohio.