Jump to content
Chapala.com Webboard

Archived

This topic is now archived and is closed to further replies.

jwgibson

30% Tax

Recommended Posts

Okay, can anyone tell me exactly how this is going to work? I was told on friday by the bank that any check or wire transfer done they were going to hold 30% because of this new law that goes into effect 1/1/2013. They say that the US banks will only honor 70% of either. We have investment accounts and also a checking account locally.

Is there any way to get around this? I am tired of the USA government always finding ways to punish those of us who do everything they arre suppose to. The cost living in the states is out of site for a lot of us who are retired and now they want more of our money.

So if I understand this right when I go to the bank to cash say a $1,000 check drawen on a US bank, the bank says they will only honor 70% or $700.00. Is this correct?

Share this post


Link to post
Share on other sites

The other question I have is with the new laws on immigration status going into effect, what about the capital gains aspect if one sells a house? It was very high if not a FM2 but soon there will not be that status. What happens?

Share this post


Link to post
Share on other sites

I just received this info from my tax preparer in the states that they will not start till 2017 with reporting in 2014. He will forward more info as it comes.

Share this post


Link to post
Share on other sites

Well, it's going to be interseting for sure, one thought is that they'll withhold 30% and then you'll have to file with the IRS to get it back. I guess it's a bit like winning a lottery or something big at Vegas, there is an IRS agent's hands in the middle of the transfer. I have a small retirement check of $900 a month so they would hold $270 a month to "insure" tax is paid, but my total tax burden is only about $40 for the entire year, so I'd have to file for a $3,200 refund? That's no bueno.

Share this post


Link to post
Share on other sites

This 'may' shed some more info:

Starting Jan. 1, 2013, every time U.S. dollars are wired offshore, the U.S. bank involved in the wire transfer will have to make a decision. Is tax owed on this money? If yes, the bank will be required by law to withhold that tax (at a rate of 30%) before making the transfer of funds.

If the bank fails to take any withholding, and it turns out the owner of the funds in question did, in fact, owe tax on the money transferred, the bank will be liable for the entire amount of the tax. If, on the other hand, the money is not taxable, but the bank mistakenly withholds the 30%, no harm, no foul, as far as the U.S. Treasury is concerned. In other words, no penalty for the bank.

Potentially big liabilities if they make a mistake in one direction. Not so much as an admonishment if they make a mistake in the other.

In which direction, therefore, would you imagine banks are likely to err? Every banker I've spoken with around the world agrees: Banks will have no way of knowing when tax is owed and when it's not. It's impossible for a bank to make that kind of determination. They'll have no choice, really, practically speaking, but to withhold the 30% from every transaction.

Meaning that, starting Jan. 1, 2013, any time you arrange to wire money to another country, you'll have to count on 30% being taken off the top, in the form of tax withholding.

This isn't a new tax. Theoretically, you should be able to have any amount withheld in error refunded to you after you've filed your taxes for that year.

As I understand it, the 30% withholding is done by the US bank side. You recoup the 30% withholding through your 1040 return.

I wonder if this extends to getting cash (form your US bank account) at a Mexican ATM?

Share this post


Link to post
Share on other sites

As far as I can tell, ATMs are not effected although an ATM is effectively a wire transfer.

There is a reasonably simple solution to this at the moment. Go online and set up a "C corporation". You will probably have to go to the states to set up a bank account for it or have a relative set up a bank account. Just make them an officer.

Wire the money to the corporation and then to your account. Corporations are exempt from this rule.

Eventually, the US will probably plug this loophole but not at the moment.

Actually, you can petition the bank to keep this from happening. Suppose that you bought a CD 3 years ago for 100,000. Now, you cash it out and the account is $105,000. The bank should take $1500 in reserve ($5000 x 30%) and transfer the rest.

This will be a mess until the banks get it sorted out.

I have also looked at PayPal but not sure just how that will work. Set up a PayPay account and tie it to a bank in the US. Set up another email address to an account in a bank in MX. I think that will also work but haven't tried it.

Share this post


Link to post
Share on other sites

I never saw any advantage to being poor my whole life, but it's looking better all the time, even reading that s l o w l y gave me a brain cramp.

Share this post


Link to post
Share on other sites

Thanks for an excellent link Trader. It sounds as if a nice well reasoned letter to senators and congresspeople may be in order.

Share this post


Link to post
Share on other sites

I don't understand: Does this new withholding only apply to U.S. investment accounts? What about making wire transfers to foreign banks using a vanilla U.S. checking account? Suppose you don't have sufficient taxable income to warrant filing a U.S. tax return and haven't done so in several years? How do you reclaim any Federal tax withheld then?

Share this post


Link to post
Share on other sites

if you are not required to file, under the threshold, and you have withholding you have to file to get witholding back.

tax planning is necessary to have no witholding, and avoid transactions that require witholding.

goal is to plan to have no withholding, and follow the rules.

Avoid transactions that require withholding.

Biggest problem is if you use a mexican bank to sell a US stock you had a loss on, if they take out withholding, thats one third of capital if you are with a non participatingt FFI

Plan Ahead avoid those transaction in the future.

Share this post


Link to post
Share on other sites

So, if I write a check on my US account for deposit to my Mexican checking account (converted to pesos of course) is there the 30% tax withheld from my bank?

Share this post


Link to post
Share on other sites

That would be the question, but as posted on some earlier links, looks like the IRS has backed off a notch and will delay stretching us on the rack for a time, maybe a year in which time maybe someone in DC will realize that not everyone living out of country is a drug dealer or money launderer or? - and that the morons that wrote some of this legislation should go back to school and learn the same. And people ask what I do with all my "spare" time? - I tell them I read regs and worry a lot.

Share this post


Link to post
Share on other sites

Dodd/Frank financial reform act. Passed in the first two years of the obama regime. Lots more good stuff coming. Over two thousand pages of reform.They are just getting started. Get off your pockets books.

Share this post


Link to post
Share on other sites

Dodd/Frank financial reform act. Passed in the first two years of the obama regime. Lots more good stuff coming. Over two thousand pages of reform.They are just getting started. Get off your pockets books.

As usual, a conservative gets the facts wrong. This has nothing to do with Dodd\Frank. It is the HIRE ( Hiring Incentives to Restore Employment), bill sponsored by Democrat Charles Schumer and Republican Orrin Hatch. It passed the Senate 68 to 29, so it was passed with many Republican votes.

Please fact check before posting misinformation. This isn't FOX news.

Share this post


Link to post
Share on other sites

OK, ENOUGH OF THE POLITICAL CRAP, IT'S NOT WANTED HERE, NOT NEEDED HERE, NO ALLOWED HERE, so if you want to debate it, send me a PM, I'll be glad to set you free.

Share this post


Link to post
Share on other sites

As usual, a conservative gets the facts wrong. This has nothing to do with Dodd\Frank. It is the HIRE ( Hiring Incentives to Restore Employment), bill sponsored by Democrat Charles Schumer and Republican Orrin Hatch. It passed the Senate 68 to 29, so it was passed with many Republican votes.

Please fact check before posting misinformation. This isn't FOX news.

I think your information is interesting and it is amazing that people allow themselves to be spoon fed inaccurate information.

Share this post


Link to post
Share on other sites

As usual, a conservative gets the facts wrong. This has nothing to do with Dodd\Frank. It is the HIRE ( Hiring Incentives to Restore Employment), bill sponsored by Democrat Charles Schumer and Republican Orrin Hatch. It passed the Senate 68 to 29, so it was passed with many Republican votes.

Please fact check before posting misinformation. This isn't FOX news.

So.. a Dem sponsored bill backed by a bunch of rinos are costing us money and headaches. You got it.

Share this post


Link to post
Share on other sites

So.. a Dem sponsored bill backed by a bunch of rinos are costing us money and headaches. You got it.

Vette

You are an "entrepreneur" here right?

Half the people that could use your services may decide to go to a competitor because of your expressed views.

If they do, THEN, you'll have headaches.

But, say what you feel, we want to know

Share this post


Link to post
Share on other sites

why is it that you feel the need to threaten vetteforon because of his opinion? we've known him for years, haven't always agreed with him,but he is an honest man and provides a good service. he did mention that both dems and repubs are to blame, them being two sides of the same coin. if you want to hear some different opinions by presidential candidates just google "third party candidates debate". now don't try to bully us too....

Share this post


Link to post
Share on other sites

I did some reading about the HIRE Act and I don't believe that is where this is coming from. The HIRE Act was just that, an act regarding hiring of employees by small business http://hireact.org/ and in fact, the IRS site http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/HIRE-Act:--Questions-and-Answers-for-Employers references FATCA as a "related" subject and that is the Dodd/Frank legislation that is giving all of us a pain in the tail feathers. I could have missed something, but I don't think so. The ACA people are trying to get FATCA repealed because of the turmoil it's causing us expats.

Share this post


Link to post
Share on other sites

×
×
  • Create New...