US Citizen Abroad in Mexico

[S T]

I was just contacted by a prior client (years ago client), moved to Cabo San Lucas Mexico, and has not filed any tax returns (by my last date since about year 2000)

He wants to obtain some sort of loan and the lending institution is asking for US Income Tax Returns - Form 1040/1040NR

He is asking me for what documentation is needed to prepare these needed tax returns - however when I have spoken or emailed with him in the past he has derived no income from Mexico - US sources has been strictly some interest income which has not required a tax filing.

So NOW what !

Any one that is familiar with these scenarios, and where I start

Thanks for any assistance for guidance - in the meantime I am looking for something on the internet ---

Sandy

[gkaiseril]

You can prepare the returns and then attach a letter explaining why the returns did not meet the filing refquirement for the year of the return.

[taxmandan]

He is asking me for what documentation is needed to prepare these needed tax returns - however when I have spoken or emailed with him in the past he has derived no income from Mexico - US sources has been strictly some interest income which has not required a tax filing.
Sandy

Sorta begs the question, what does he live on and how does he plan to pay back a loan? Anyway, I would start with getting the IRS income transcripts for the years and probably do as gkaiseril said, and hope the lender 'gets it.'

Daniel

[jimmcg]

I'll take a wild guess. Do you think maybe there is an income stream that is "off the radar."

[Bees Knees]

He wants to obtain some sort of loan and the lending institution is asking for US Income Tax Returns - Form 1040/1040NR

He is asking me for what documentation is needed to prepare these needed tax returns - however when I have spoken or emailed with him in the past he has derived no income from Mexico - US sources has been strictly some interest income which has not required a tax filing.

I'll take a wild guess. Do you think maybe there is an income stream that is "off the radar."

I’m not sure whether some people are really that stupid, or whether they think we are that stupid.

Whatever the case, I would simply tell it like it is. No lending institution is going to give you money if you don’t make enough to file a tax return. If you do make enough money to qualify for getting a loan, then you appear to be in violation of U.S. federal income tax laws which require you to report and pay tax on world wide income. Which is it?

[S T]

Client

When this client lived in California I used to prepare their taxes - then they moved to Mexico and retained citizenship and Calif residency - no longer prepared returns.

client, after many years as in 15 or 16 years - "googled me" or something and found my email address and then took up contact again.

I am not liking this situation at all - client has a business in Mexico, the client states that they report little on Mexican Tax Returns and has not filed anything for Federal and California except for a few years back on some interest income to reclaim some Federal Withholding.

So the client has not been filing any US tax returns for most of the last 15 years. Too many questions, about documentation for income reported to US - whether US and Mexico cross check, etc.

I really feel like I need to "run" from this scenario as fast as possible I don't believe the client is getting the "grasp" that due to the fact they have retained citizenship and Calif residency, returns should have been filed all of these years

I am just not familar enough with the nuances of US Citizens Living Abroad and producing or receiving foreign income. I have one client that works overseas for a US employer, and that one is pretty easy for me.

I think this one can be more complex??

Thoughts???

Thanks,

Sandy

[jimmcg]

When this client lived in California I used to prepare their taxes - then they moved to Mexico and retained citizenship and Calif residency - no longer prepared returns.

client, after many years as in 15 or 16 years - "googled me" or something and found my email address and then took up contact again.

I am not liking this situation at all - client has a business in Mexico, the client states that they report little on Mexican Tax Returns and has not filed anything for Federal and California except for a few years back on some interest income to reclaim some Federal Withholding.

So the client has not been filing any US tax returns for most of the last 15 years. Too many questions, about documentation for income reported to US - whether US and Mexico cross check, etc.

I really feel like I need to "run" from this scenario as fast as possible I don't believe the client is getting the "grasp" that due to the fact they have retained citizenship and Calif residency, returns should have been filed all of these years

I am just not familar enough with the nuances of US Citizens Living Abroad and producing or receiving foreign income. I have one client that works overseas for a US employer, and that one is pretty easy for me.

I think this one can be more complex??

Thoughts???

Thanks,

Sandy

Go with your gut instinct..............The magic word is "run."

[S T]

Still working through this

Does anyone have experience with a US citizen reporting Mexico Income?? Wondering what documents are needed to establish the income reported on the US return???

Thanks,

Sandy

[WhiteOleander]

There is a client in our office (not my client) that has quite a few rentals in Mexico. He is also Mexican. Here legally. He simply brings us his rental income info and expense info. Just as he would do if the property was here in the US. Then we convert the figures to dollars and file the Sch E. We have never had a problem.

As far as the client mentioned in this post is concerned, I would be very dubious about his "innocence" about filing US taxes. Many people move off to other countries and simply don't file and pay taxes. They are a form of tax protestors. Now, the plan is coming back to bite him.

I would refer him to someone else. Perhaps a tax attorney. There may be some problems looming for him that we are not aware of.

[Lion]

Worldwide Income

Either he provides you with his worldwide income for all those years and a very large retainer, or you decline his business.

[S T]

Us and Mexico

Thanks everyone - you are at least giving me some info that I don't have.

I am trying to "back off" on this client, but so far not so good - I keep implying negatives and have suggested Attorney and Mexico Accountant contacts to no avail. So guess I will have to be more xplicit in documentation or send him to "San Diego" as it is across the border

White Oleander thanks for sharing as you gave me some really "good" info" All the other info to "NOT ENGAGE" this client is also really good

Not sure I want to tackle this as I have "very limited experience and knowledge" If
"someone else can share" their experiences as well those will be welcomed. I did back off a a similar issue on this with a resident of Argentina last year - so have those notes and and the threads on the Board.

I am so thankful that all of you are out there and are willing to share - my PM is also listed in case you don't want to post on the Board.

Thanks for your support!

Sandy