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12 months ago

Expat Taxes

12 months ago
Greetings future fellow expats! I'm planning to retire to Latin America later this year, but whether I end up in Mexico (which is otherwise my first choice) strongly depends on my tax situation there. I've done a lot of searching online and found too much conflicting info, and I can't be the only one in this situation, so hopefully someone here knows the answer.

My retirement income is all US sourced and comes mainly from dividends and capital gains from stocks. Despite Mexico's reputation for lower taxes, on the surface it seems my situation would actually be worse there because there's no category for "long-term" capital gains and "qualified" dividends, which enjoy a bit of a tax break in the US, where you can make up to $41,675 tax-free.

From what I've been able to gather, in Mexico all capital gains/dividends are taxed the same with no minimum threshhold or standard deduction, and dividends are even taxed twice due to withholding, meaning that there you'd be venturing deep into the 30% bracket plus an additional 10% on dividends before you'd owe even a single dollar in the US.

Unless that's all wrong (which I dearly hope!), the only way I can see it working out is if the fact that it's all US-sourced income that stays in a US-based brokerage account gets me out of Mexican income taxes entirely, or if I could somehow keep my tax residence in the US. I'd honestly rather pay Mexico if the amounts were at all similar since I'd be enjoying the benefit of living there, but it seems like the US are just kinder to retirees who saved and invested rather than going the pension route.

Does anyone else have experience with this kind of US-based income, how exactly it's taxed or not taxed in Mexico, and possibly how to keep a US domicile cheaply that tax authorities would actually accept?

Thank you in advance for any answers!

William Russell
William Russell

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Allianz Care
Allianz Care

Flexible solutions allow you to tailor your cover to meet your needs and budget. Use Promocode: LIFE10 and get 10% off your international health insurance for life!
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Flexible solutions allow you to tailor your cover to meet your needs and budget. Use Promocode: LIFE10 and get 10% off your international health insurance for life!
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William Russell
William Russell

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