# General questions



## chuck846 (Jan 15, 2016)

Not really 'expat' questions but kind of...

1) My wife has been a self-employed contractor with a home office (roughly 10% of the house - 100% office use). That has been true for about the last 17 years. I plan on taking the 'business use of home' thingy on our schedule C - even though our home is now in Mexico. Is that ok ?

2) Even though our healthcare expenses are a fraction of what they were in the States I plan on taking the 'self-employed healthcare' thingy for our Mexican health insurance. Is that ok ?

3) When we last had our taxes done professionally - years ago - the accountant put the full cost of my wife's desktop computer on our schedule C line 13. All of it for the single tax year. Last year we bought her a new laptop. Can I still put the full cost on schedule C this year ?

Our taxes really are very simple. We just take the standard deduction, we don't take the foreign earned income thing, no business use of car, actually very very few business expenses which are picked up by her client in Germany. Less simple are the FBARS and 8938's :-(

Thank you.


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## Bevdeforges (Nov 16, 2007)

If you're living and working in mexico, you shouldn't actually be doing anything other than filing a US tax return. Normally income tax is payable to the country in which you are resident. The source of your income or the location of your clients/customers has no bearing on the situation.
Cheers,
Bev


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## chuck846 (Jan 15, 2016)

I'm sorry - I don't understand your reply. We live 100% of our time in Mexico. We make no Mexican income (other than bank interest). My wife works as a consultant for a German company which deposits her compensation in a US bank in the States. We do not even have Mexican Tax IDs. The first year we were here we walked into the equivalent of the IRS office here and they said we should not file a Mexican tax return as we had no Mexican income.


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## Bevdeforges (Nov 16, 2007)

I don't know anything about the Mexican tax system, so I'll assume the tax people you spoke to know what they're talking about. But if you're resident outside the US, you do have to file US tax returns, but earned income is still excludable if you meet either the physical presence test or the bona fide resident test (and it sounds like you meet both). It doesn't matter where your earned income comes from, nor where you are paid. 

Now, if that income exceeds the FEIE (about $100,000 these days), the fact that you pay no tax in Mexico means you'll pay some tax to the US (and have to apportion your deductions between the excluded income and the excess). But in general, you shouldn't have to pay tax on that income. (Works the same way for folks in those Gulf States where there is no income tax - the first $100,000 of earned income is tax free.)
Cheers,
Bev


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## chuck846 (Jan 15, 2016)

I suppose it wouldn't hurt for us to walk into the Mexican IRS office again (as a few years have passed) and confirm our understanding.

What you say makes sense - but things don't always make sense here 

Since coming here I do our US tax returns I would say identically to how I did them when we lived in the States - well except for the Foreign Tax Exemption which I take.

It is a sad statement when even college-educated honest people can't get filing taxes done right.

Thank goodness my wife doesn't have many working years to go.


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