U.S. Tax Filing Requirements for Expats Living in Mexico

I frequently receive phone calls and e-mails from American expats living in other countries asking about their tax filing requirements. The simple answer is US citizens and Green Card holders are taxed on worldwide income. The United States is one of the few countries that utilize this approach. There are certain tax benefits available to expats. Those include the foreign earned income exclusion increased to $100,800 for 2015 from $99,200 in 2014. You may ask what is an exclusion? S imply, it is a subtraction from your foreign earned income. To help you better understand what is not foreign earned income there is a mnemonic…RAPID. R stands for rentals. A is for annuities. The letter P represents pensions. I stands for interest and D represents dividends. None of these income sources are eligible for the exclusion.

The other benefit available to expats is the foreign tax credit or foreign tax deduction. Normally, the foreign tax credit is more beneficial than the foreign tax deduction. The foreign tax credit is a calculated number that is an offset or subtraction from your US tax liability. The foreign tax credit mitigates the effects of double taxation.

Details on the foreign earned income exclusion and foreign tax credit are outlined in a Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad, available for free from the Internal Revenue Service at IRS.gov. After you review Pub 54 and still have questions, don’t hesitate to contact me. I don’t charge for brief questions.

How I Can Help American Expats living in Mexico Who Need to File U.S. Taxes

If all this seems overwhelming, yes, I can prepare your return(s). I have prepared expatriate tax returns and provided clients tax-planning advice for the last 30 years. I specialize in this area. I have lived and worked overseas and have clients around the world. My objective is to make sure you keep every tax dollar you legally deserve.

To begin a professional relationship, I need certain “sensitive” information to open a file for you and your family. That includes your legal name (must match your social security card), social security number, birth date, occupation, mailing address. In addition I need dates of arrival/departure from the USA in 2011 to the present, state of record (Do you intend to return to this state?), visa status, name of your employer, if any, copy of your employment contract with earnings statement, or financial statements if self-employed…in addition to the information requested below. I am attaching an Expatriate Organizer to use. You do not need to copy redundant information. Therefore, if you send me a source document like a W-2 or 1099…it does “not” need to be recopied into the Organizer.

Please use my DropBox (encrypted email) to send the information to me securely via this link.

I normally begin the relationship with a review of your last three years returns for you at “no charge”. During the review, I am:

  1. Looking for carry-forward information that is necessary to prepare your 2013 return(s),
  2. mistakes or corrections that may result in additional refunds for you, and
  3. finally, to evaluate the complexity of your returns to provide you with a “firm” estimate as to the cost of the service.

That estimate and the scope of work are outlined in an Engagement Letter that is sent to you for your “review and approval”. I am not engaged until you approve the terms and conditions of the relationship. You maintain control over the whole process at all times.

I use DropBox (encrypted email) to send you sensitive information. After I receive the Engagement Letter, I may send you an E-Organizer to use to communicate your detailed information to me. The E-Organizer also utilizes encryption technology and is very “user friendly”. I think you will like it. Alternatively, you may submit your information to me in any manner that is convenient for you. I must tell you that it pays to be organized.

I will prepare the returns and send them to you, initially, in PDF format (Adobe Reader). You will need the last four of your SSN to open this file. After you review and approve the returns, I prepare a filing copy and a copy for your files and mail them to you by USPS or other expedited mail service, if necessary. I am also able to file your returns, electronically, with the government

I hope this detailed description of the process has answered all your questions and concerns. I am fairly structured in what I do to help minimize mistakes or misunderstandings. The most important thing for me is to insure that you completely satisfied with the service.

If You Are a U.S. Expat Citizen Living in Mexico

The next step is for me to review your prior year returns, if available. If you wish to send me the copies by expedited mail use the address below. They also may be scanned in as an email attachment or faxed to me at (541) 923-0903. Whatever is easiest for you? If you do not have the returns available and your current information is complete, simply send that information to me.