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mexican bank account and irs

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prop
3/11/2019 09:57 EST

i have a mexican bank account .i know i have to report it to the irs if it is over 10,000 at any time during the year.i know i had to fill out an usa irs form when i opened the account.i sold some land and the buyer is giving me payments of 200,000 peso`s a year.i take most of the money out as soon as it`s transfered but it still shows on the account for a day or so.i guess i have to report the income.anyone have any experience with this?thanks for any help

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morepaul
3/11/2019 10:44 EST

You must also file an FBAR form 114..It is a Treasury Department requirement and is filed separately from the Federal Income Tax reporting.. Probably best to always be under the $10,000. threashold to eliminate this hassle.

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YellowTail
3/11/2019 19:31 EST

Perhaps to the other end of the scale - I just finished our 2018 taxes and submitted my FBARs (which you can ONLY do online by the way). Last year we had several Mexican accounts. I submitted an FBAR for myself for those accounts (rounding up so they can't say I cheated them), copied my file and submitted the same info under my wife's name. I then took that same information and finished my 2018 tax return. I created 8938 reports and entered the same info shown on the FBARs.

I am a self-taught accountant :-)

If the account you are referring to does not earn any interest, then you are done. If your account does earn interest then you will have Mexican ISR withheld and if it is substantial you want to deduct that from your US taxes as foreign tax credit...

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bigrio
3/12/2019 22:58 EST

Account owner must report to IRS if aggregate (single/multiple account) bank balances ever exceed $10,000. If one has over $10,000 on deposit in Mexico the Treasury wants to know.

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tomwins
3/13/2019 12:41 EST

Even for just a moment during the year, if the account is over the equivalent of $10,000 USD you MUST file. So YES, you must report it. It is not that difficult as it is done online and the instructions are fairly clear. You will want to know the highest balance during the year, so be sure and take note of that so you can report that amount.

As you are close to $10,000 USD with the 200.000 MXN, and if you don't have any other money in the account, you might end up being under depending on the exchange rate. You'll have to wait until January 2020 to know what that is.

You might even go to see what the exchange rate is for Dec 31, 2019 (which is what you'll use) and see if it puts you over. It was 19.640 12/31/2018 - to give you an idea.

Here is a link to the site with the exchange rate: https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/

For the instructions, forms, etc. go to https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

If you need to report, it must be submitted by April 15.

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prop
3/14/2019 09:50 EST

so do i also have to report it on my regular tax return ?

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prop
3/14/2019 09:50 EST

so do i also have to report it on my regular tax return ?

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YellowTail
3/14/2019 10:32 EST

Here is a link for irs info :
https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

Personally - I include an 8938 for each of our Mexican accounts every year. Some years we need it, others not - but I don't think the IRS will penalize me for giving them too much info. Besides - I generally start each years returns by making a copy of the previous years. And since I already did the work for the FBAR - it is trivial to complete the 8938.

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morepaul
3/14/2019 10:46 EST

Form 8938. I strongly suggest you Google it since there are numerous thresholds that can exempt you from filing that specific form.

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YellowTail
3/14/2019 11:14 EST

@prop - the other thing to keep in mind is that it is probably better to err on the side of honesty. We have several accounts in Mexico. For example, checking accounts, investment accounts. The way I read the IRS/Treasury rules - if my wife receives her social security check direct deposited into her Mexican checking account and two days later I move that money into a different account (to earn interest) then our maximum amount on deposit is really TWICE what logic would dictate. Multiply that by 12 months - throw in some other transfers (securities maturing etc) and it may be easier to reach thresholds than you would think, Purchase a house (or car) in Mexico - it all adds up.

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YellowTail
3/14/2019 11:16 EST

... not that you have to report the car or house - but you need to report the fact that those monies were in Mexico before the purchase.

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morepaul
3/14/2019 14:57 EST

Copied following info on changes this year: from Nolo.
For married couples filing jointly (as almost all do), these thresholds are increased to $100,000 and $150,000, respectively.If you live abroad, the thresholds are greater: $200,000 at the end of the year or $300,000 at any time; $400,000 and $600,000 if you’re married and file jointly.

Unlike Schedule B, Form 8938 requires you to provide detailed financial information about your foreign accounts.

There are hefty fines for failing to file Form 8938: “Up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply.” These fines can reach tens of thousands of dollars.

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bigrio
3/14/2019 23:29 EST

Don’t confuse a bank account balance scrutinized via FBAR with various identified foreign financial assets (including bank depository accounts) such as stocks individually held, business interests, a trust, etc.

If your simple bank account exceeds $10K it must be duly reported. If your bank balance is 5K but you own cetes, mutual fund shares, and partner in a business you should consult a competent CPA.

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prop
3/17/2019 17:18 EST

i just noticed that i had to fill out a a w-9 form when i opened the account.from what i can tell it the bank will automatically deduct and report any taxes due on interest i earn.it should not be a problem as this account is just a simple checking account.

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prop
3/17/2019 17:18 EST

i just noticed that i had to fill out a a w-9 form when i opened the account.from what i can tell it the bank will automatically deduct and report any taxes due on interest i earn.it should not be a problem as this account is just a simple checking account.

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prop
4/7/2019 09:16 EST

so if it`s over 10,000 but less then 50,000 i just file fbar?

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delta90017
4/8/2019 12:58 EST

FBAR requirements. If you have an interest in, or signature over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2018, you must file electronically the 2018 Report of Foreign Bank and Financial Accounts Form 114 by April 15 with the Financial Crimes Enforcement Network of Treasury (not the Internal Revenue Service). Note that foreign life insurance cash values and annuity cash values are included. Under recent legislation you will receive an automatic extension (no specific request for an extension is required) to October 15, 2019. You can get Form 114 through the BSA E-Filing system website: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar

The FBAR Form 114 is not filed with the tax return. The inflation-adjusted civil penalty for failure to file is not to exceed $12,459.00 per violation for nonwilful failures that are not due to reasonable cause. For willful violations, the penalty can be the greater of $124,588 or 50% of the account balance.

Form 8938. In addition to Form 114, Form 8938 is filed with the tax return. Form 8938 does not relieve you of the obligation to file Form 114. Form 8938 reports foreign assets (not just foreign bank and financial accounts). If you are an expat and married filing jointly, you must file form 8938 if your total asset value was more than $400,000 on December 31 or more than $600,000 at any time during 2018. Note that a financial account held at a foreign branch of a U.S. financial institution does not count for Form 8938 but does count for Form 114, nor does Mexican real estate or art, antiques, jewelry, cars and other collectibles held directly. Those totals for Form 8938 reporting thresholds will include the foreign bank and financial accounts reported on Form 114. There is a civil penalty of $10,000 for failure to file as well as criminal penalties.

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Raulb
4/27/2019 20:42 EST

Hi Prop,
If you have sold property in Mexico you have to report capital gains to the USA IRS. I sold a property in 2017 and I have to report this on the 2018 taxes here in USA. Also, you have to report any foreign bank account if there is more than 10K. https://www.efilefbar.org/
There are sustancial penalties if you do not report on time to the www.EfileFBAR.ORG. Good Luck.

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Cozumeldeb
4/27/2019 21:11 EST

Were u a permanent resident when u sold your property? If so capital gains way less.

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Cozumeldeb
4/27/2019 21:11 EST

Were u a permanent resident when u sold your property? If so capital gains way less.

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Cozumeldeb
4/27/2019 21:19 EST

https://www.irs.gov/newsroom/report-of-foreign-bank-and-financial-accounts-fbar-1.
We bought in MX in 2001, our MX lawyer told us never to open MX bank acct. Never did. No issues.

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tomwins
5/1/2019 12:02 EST

Cozumeldeb, I don't understand your post. Maybe I am dense. Why did your lawyer tell you not to open a Mexican account?
We have two and don't have any issues. I fact, it has been a great benefit. I now have my CFE, Telmex, and cell phone bill paid directly from my account each month. Of course I monitor it and so far have had no issue with it.
Also, our banker gives us excellent car and home insurance rates so we've decided to go with them for our insurance.
So please let us know the problem your lawyer sees with having a Mexican bank account as it has been of great benefit to me.

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morepaul
5/1/2019 15:33 EST

I agree with previous post. I have had good service and auto payment processing with Mexican Bank saving me much time and hassle.

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longtimelurker
5/1/2019 16:01 EST

Remember that in 2001, it was only 6 or 7 years after the peso devaluation crisis. Millions of people lost millions of pesos/dollars in the banks. My cousin sure did.

CozyDebs attorney's advice, at that time, was solid. A lot has changed since then in Mexico and banking.

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