# Temporary resident - pay mexican tax?



## chlsy8 (Feb 28, 2014)

Hi guys,

Couldn't find this online. 

Does temporary resident need pay Mexican tax? I am applying temporal resident card and won't have any income from mexican resource.

Thanks,
George


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## chlsy8 (Feb 28, 2014)

and what about capital gains from US stock market? is it taxable in Mexico?


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## timmy45 (Mar 22, 2021)

Generally there are no tax implications if you have no income generated in MX. We file and pay US taxes just as always and have no tax liability here in MX since we have no gainful employment here. The might be different depending where your home country is.


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## eastwind (Jun 18, 2016)

And it doesn't make any difference whether you are on temporary or permanent residency, the rules are the same.


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## maesonna (Jun 10, 2008)

You would need to pay Mexican tax *IF* you received income from Mexican sources; for example, income from a Mexican employer, clients, or customers; income on investments paid into a Mexican bank; or rental income from tenants in a property in Mexico.

As long as this is not your case, you won’t owe any income tax in Mexico.


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## chlsy8 (Feb 28, 2014)

Thanks guys, really appreciate your replies

Is temporary resident eligible for Mexican government grants?


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## maesonna (Jun 10, 2008)

What Mexican government grants, for instance? Asking, because offhand I can’t think of any grants that even the general population would be eligible for.


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## citlali (Mar 4, 2013)

well there are grants to students from FONCA for specific projects but I have no idea if they are available to non national and good luck getting one to start with. Under AMLO lots of funding has been cut to the bone.


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## ninagris (12 mo ago)

maesonna said:


> You would need to pay Mexican tax *IF* you received income from Mexican sources; for example, income from a Mexican employer, clients, or customers; income on investments paid into a Mexican bank; or rental income from tenants in a property in Mexico.
> 
> As long as this is not your case, you won’t owe any income tax in Mexico.


Do dual citizens have to pay tax on income made online (remote work or social media money) from US companies?


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## eastwind (Jun 18, 2016)

I think probably not, but I'm not a tax accountant.

As I understand it all, assuming you are a US citizen, then you're taxed by the US on your worldwide income. Assuming the money is being deposited to a US bank, then you'll pay US taxes as normal. And Mexico won't have any idea, so you can just pay your US taxes.

Now if you wanted to worry about it beyond that, you could hire a Mexican tax accountant. I _think _that any tax you paid to the US reduces any tax you'd owe to Mexico, and that _if_ he'd did all the figuring he'd tell you you owed zero to Mexico (because the US taxes at a higher rate). But what I expect is that if you _try _to hire an accountant, they'll tell you "don't worry about it" without doing anything (or taking any of your money for their opinion). Which admittedly is less satisfactory, but it seems to be the common answer.

In Mexico there seems to be a widespread attitude that you only have to pay taxes if there's a risk of getting caught for not paying them. The idea that cheating on taxes is bad just doesn't translate here, it's assumed cheating on taxes is normal, kind of. You can disapprove of that if you want, but its hard to find accountants to cooperate with you and do the math for you when, in their view, its unnecessary work that won't save you any money in the end.

Now if the money is being deposited into a Mexican bank, you have a bit more to worry about, and you might actually need to get someone to do the math for you, regardless of how hard it is to find a willing expert. So don't get paid that way.

Being a dual citizen makes it a little more tricky than if you were just a resident, because Mexican citizens, as I understand it, are taxed on their worldwide income, so theoretically you should report it to Mexico. But I still think don't-ask-don't-tell is the conventional recommendation.


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## maesonna (Jun 10, 2008)

ninagris said:


> Do dual citizens have to pay tax on income made online (remote work or social media money) from US companies?


As eastwind suggested, if you owe income tax to both countries, you don’t have to pay tax _on the same income_ to both countries, because Mexico and US have a no-double-taxation agreement. This is definitely true.

People who do end up having to file in both countries can deduct income on which they paid tax to one country from the income on which they owe tax to the other country.


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## ninagris (12 mo ago)

eastwind said:


> In Mexico there seems to be a widespread attitude that you only have to pay taxes if there's a risk of getting caught for not paying them. The idea that cheating on taxes is bad just doesn't translate here, it's assumed cheating on taxes is normal, kind of. You can disapprove of that if you want, but its hard to find accountants to cooperate with you and do the math for you when, in their view, its unnecessary work that won't save you any money in the end.


This is the funny part... there is a house near us, in an otherwise solidly lower-middle income neighborhood, that is owned by an accountant. That house is clearly a washing machine for their money. I mean it's COVERED in stained glass, fountains, ornate cement sculptures-- it even has a glass elevator that goes to ONE of their roof gardens, on the FOURTH floor. It's a private home. A neighbor explained it to me. It's assumed some of their clients are cartel.


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## eastwind (Jun 18, 2016)

maesonna said:


> People who do end up having to file in both countries can deduct income on which they paid tax to one country from the income on which they owe tax to the other country.


I'd say it slightly differently.

People who file in both countries can deduct the taxes paid on the income to one country from the taxes owed on the same income to the other country. (You don't subtract the income from the income, but the taxes from the taxes). 
The difference between those two matters if the tax rates are not the same.

If one country taxes income at 15% and the other at 20%, you are going to end up paying 20% of the income in taxes, either all 20% to one country and 0% to the other, or 15% to one and 5% to the other, depending on which country gets paid first. 

For US citizens that don't bother doing the Mexican calculations or filing in Mexico, they are making the assumption that the US rate is higher, and they're paying the US first, so they assume the Mexican taxes will be zero, and they are assuming Mexico doesn't require them to file if they owe zero (I think that's currently true).

Some of this stuff could change in time. The tax treaty with the US isn't likely to change, but just as Mexico is beefing up its factura tracking apparatus, they might eventually require more filing, even in the case of zero owed. Depends I suppose on how long the political will is there to tighten up their system and reduce fraud.


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## maesonna (Jun 10, 2008)

Thanks for the correction. The whole thing is laid out here in the four pdfs linked on this page, so anybody with time to spare and a vested interest could check out all the details.


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## MangoTango (Feb 8, 2020)

I haven't read all of this thread. I believe that the Mexican tax rates might be higher than the US - BUT - in Mexico they deal with _real_ profits not nominal. Real is post-inflation. The US doesn't care about your inflation. Profit is profit - you need to pay tax - on ALL your Mexican gains. 

I think every Mexican financial institution will withhold the taxes due Mexico. The rate withheld (and the taxes) seem to change year to year. That _might_ be one advantage to all of this new RFC stuff. If you have an RFC and you have taxes withheld - there is a chance you could be due a refund. (I doubt that would be a trivial exercise). 

Lastly - (and I am on very thin ice here) - there is a threshold at which point a US investor would need to pay Mexico more tax than that withheld by the 'bank'. That also will be a piece of this new RFC/tax reporting thing...


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## chlsy8 (Feb 28, 2014)

I heard there are culture and art grants but not sure exactly what they are and how I can apply. 

Say if I want to have an art project here in Mexico, how I should pay people collaborating with me - in case that I don't get the grant, only from my own money (non-mexican resource), is it okay paying cash to the freelance gig people, and just ask them to sign on a hand made receipt?

I am in my process of applying residence card (BTW yes I am US citizen)- does the card come in the mail? or they would notify me and I will go pick it up? I am changing address constantly on airbnb so I don't want to miss it. 

Thanks to you all for the great inputs.


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## eastwind (Jun 18, 2016)

There are two issues you need to nail down.: whether they're an employee or a contractor, and whether they retain any rights to the work or it's all yours.


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## chlsy8 (Feb 28, 2014)

eastwind said:


> There are two issues you need to nail down.: whether they're an employee or a contractor, and whether they retain any rights to the work or it's all yours.


definitely not employee, it's freelance theater gig, will need actors, location and technicians, etc. The rights will be all mine.


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## eastwind (Jun 18, 2016)

well, don't assume that the rules on such things are the same in mexico as the US. Maybe they are, I don't know. Just saying, some things are surprisingly different. Different constitution, different rights here.


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