US/Mexican citizen, living and paying taxes in Mexico, being asked for the first time to fill out W9 Thread poster: Claudia Reynaud
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Hi everybody:
I was wondering if any of you are in my situation and could shed some light on my current situation. I am a dual US/Mexican citizen, but I have lived practically my entire life in Mexico, and have been filing tax returns only in Mexico, except for the year I lived in Boston, during which I did work and did file a US tax return. I have had US clients for the whole 22 years I've been working as a translator, and I had never been asked to fill a W-9 form. They just send m... See more Hi everybody:
I was wondering if any of you are in my situation and could shed some light on my current situation. I am a dual US/Mexican citizen, but I have lived practically my entire life in Mexico, and have been filing tax returns only in Mexico, except for the year I lived in Boston, during which I did work and did file a US tax return. I have had US clients for the whole 22 years I've been working as a translator, and I had never been asked to fill a W-9 form. They just send me a check and I pay taxes on these amounts in Mexico.
As it turns out, I just recently completed a translation job for a US translation agency, and after completing the job, I was asked to fill out a W-8BEN form, but it clearly states that the W8-BEN form is NOT for US persons... So, instead, I was asked to fill out a W-9 form, which after spending two hours on the phone with the IRS, would imply that I would need to file US tax returns for all income earned during my 22 years of work... I don't even know how much I earned or how many expenses I deducted prior to 2005, because in Mexico, we are only required to keep records for a period of 5 years. Besides, I know have two children (Mexican citizens, ages 13 and 11), for whom I would have to get ITIN numbers to be able to list them as dependants, AND I've been divorced for 6 years, and I have no contact with my ex husband, so I wouldn't be able to get information on his earnings either.
I had always been told by my accountant that I did not need to file US tax returns, because there is a tax treaty between Mexico and the US, but according to what the IRS man said (most of which I did not understand at all, because he kept on citing paragraphs of various tax laws and publications at light speed), that's not true. Just for being a US citizen, I am required to file tax returns, no matter where I live.
In any case, I was also recently hired by another US translation agency and before signing the service agreement, I discussed this situation and they told me that I would not need to fill out a W-9, because I live and work outside the US.
So... I'm really confused at this point. My new accountant in Mexico really doesn't seem to know too much about about international tax law, and I do not know who I can turn to for help on this matter.
Any help will be greatly appreciated!
Kind regards,
Claudia. ▲ Collapse
| | | | LEXpert 
United States
Local time: 00:39
Member (2008)
Croatian to English
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| IRS=right, your accountant=wrong! | Feb 10, 2011 |
US citizens must file tax returns and report any worldwide income regardless of where they live or other citizenships held. Depending on various tests (physical presence outside the US for a sufficient amount of time in the year, among others), you may be exempt from actually paying any taxes on foreign earned income up to a certain relatively high (well, high for translators anyway) threshold, as well as a credit toward US tax liability of any foreign taxes paid.
In any case, not ... See more US citizens must file tax returns and report any worldwide income regardless of where they live or other citizenships held. Depending on various tests (physical presence outside the US for a sufficient amount of time in the year, among others), you may be exempt from actually paying any taxes on foreign earned income up to a certain relatively high (well, high for translators anyway) threshold, as well as a credit toward US tax liability of any foreign taxes paid.
In any case, not filing your US tax return is a big no-no! You really need to contact a reputable, US CPA and/or tax attorney now and get this sorted out ASAP. The good news is that is very possible you don't owe any US tax (though you still have to file), and the IRS is rumored to generally be receptive to people who want to legalize their affairs.
Good luck!
[Edited at 2011-02-10 21:45 GMT] ▲ Collapse
| | | | | I can second that | Feb 10, 2011 |
Rudolf Vedo CT wrote:
US citizens must file tax returns and report any worldwide income regardless of where they live or other citizenships held. Depending on various tests (physical presence outside the US for a sufficient amount of time in the year, among others), you may be exempt from actually paying any taxes on foreign earned income up to a certain relatively high (well, high for translators anyway) threshold, as well as a credit toward US tax liability of any foreign taxes paid.
In any case, not filing your US tax return is a big no-no! You really need to contact a reputable, US CPA and/or tax attorney now and get this sorted out ASAP. The good news is that is very possible you don't owe any US tax (though you still have to file), and the IRS is rumored to generally be receptive to people who want to legalize their affairs.
Good luck!
What he said. Sorry!
| | | | Claudia Reynaud
United States
Local time: 01:39
English to Spanish
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TOPIC STARTER
Thanks for your responses, Rudolf and Janet.
Can I then send my W-9 to this employer while I get this sorted out, so I can get paid for the job?
Any ideas on how I can find a "reputable" US CPA or tax attorney that won't leave my kids and I in the poorhouse?
Thanks again!
Claudia.
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| US/Mexican citizen | Feb 10, 2011 |
Hi Claudia - a few years ago I had a little problem with my taxes and got some great help from an IRS employee who spends a few weeks at the US Consulate (in Guadalajara) every year. Why not call your US Consulate and ask if they'll be offering this service?
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Hi Claudia,
I sympathize with you. I'm also a U.S.-Mexican dual citizen who was raised in Mexico, but I became aware very early in my career that I had to file income tax returns regardless of where I lived. I hope the following link can shed some light into your situation. I do not personally know or endorse the author of this blog, but I thought the reference could help you... I hope it does.
¡Mis mejores deseos de que soluciones esto muy pronto! Saludos.
... See more Hi Claudia,
I sympathize with you. I'm also a U.S.-Mexican dual citizen who was raised in Mexico, but I became aware very early in my career that I had to file income tax returns regardless of where I lived. I hope the following link can shed some light into your situation. I do not personally know or endorse the author of this blog, but I thought the reference could help you... I hope it does.
¡Mis mejores deseos de que soluciones esto muy pronto! Saludos.
Esperanza Gallegos
El Paso, Texas / Juárez, México
http://us-mexicantax.blogspot.com/2010/04/fast-us-income-tax-facts-for-americans.html ▲ Collapse
| | | | | You don't have to pay | Feb 11, 2011 |
From the UNITED STATES - MEXICO INCOME TAX CONVENTION
( http://www.irs.gov/pub/irs-trty/mexico.pdf )
ARTICLE 14 Independent Personal Services
1. Income derived by an individual who is a resident of a Contracting State [i.e., Mexico or the U.S.] from the performance of personal services or other activities of a similar nature in an independent capaci... See more From the UNITED STATES - MEXICO INCOME TAX CONVENTION
( http://www.irs.gov/pub/irs-trty/mexico.pdf )
ARTICLE 14 Independent Personal Services
1. Income derived by an individual who is a resident of a Contracting State [i.e., Mexico or the U.S.] from the performance of personal services or other activities of a similar nature in an independent capacity shall be taxable only in that State, unless:
a) such resident has a fixed base in the other Contracting State which he regularly makes use of in the course of performing his activities; in such case, the other State may tax the income from services performed in that other State which is attributable to that fixed base;
or
b) the resident is present in the other Contracting State for a period or periods exceeding in the aggregate 183 days within a 12 month period; in such case, the other State may tax the income attributable to activities performed in that other State.
2. The term “personal services” includes especially independent scientific, literary or artistic activities, educational or teaching activities, as well as independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
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Of course, if you talk to an IRS guy, they will want you to pay. That's what they are there for. ▲ Collapse
| | | | Claudia Reynaud
United States
Local time: 01:39
English to Spanish
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TOPIC STARTER | thank you all for your links and helpful advice | Feb 11, 2011 |
Daniel: I will be reading the IRS publication you sent more carefully this afternoon. Thank you for sending this along. It's good to know that I won't have to pay double taxes, although with the link that Esperanza sent (thank you, Esperanza), it seems as though I am required to pay Social Security. It looks like the author of the blog is knowledgeable about on this subject, so I will be e-mailing him to ask for a quote on how much his help on getting my affairs in order would cost. I had also t... See more Daniel: I will be reading the IRS publication you sent more carefully this afternoon. Thank you for sending this along. It's good to know that I won't have to pay double taxes, although with the link that Esperanza sent (thank you, Esperanza), it seems as though I am required to pay Social Security. It looks like the author of the blog is knowledgeable about on this subject, so I will be e-mailing him to ask for a quote on how much his help on getting my affairs in order would cost. I had also thought of contacting the US Embassy, so now I know that they might be able to provide some help (thanks, Kim).
Thanks again to all of you for taking the time to help me out. I really, really appreciate it.
Kind regards,
Claudia ▲ Collapse
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