Claiming for USA taxes on a part-time rental in Mexico

[Rachel30]

I rent my house in Mexico, and for a few months out of the year, we rent out our 2nd room on airbnb. Last year I received a 1099 from Airbnb to file with my claim. This year they're only sending them to those who earn $20,000+. We've brought in almost $3,000, but do I need to claim it or not? And if so, how? It's not officially registered as a vacation property. The house is in Mexico, but the payments go to my USA account.

Thanks!

[Clare0]

@Rachel30 When I do my taxes on Turbo Tax one of the questions is "did you have income earned outside the US".  I'm no tax expert, but I think you do need to report all income regardless in what country the income was generated especially if the payouts were made to a bank in the US.

Keep in mind, Airbnb has a record of all your payouts even if they didn't report them to the IRS in the form of a 1099. 

[Marla6]

Hello,

I have a similar question. I rent out a few studios in Playa del Carmen year round, and pland to file the Foreign Earned Income Exclusion back in the U.S.(I am a U.S. citizen and all payments go to my U.S. bank via Paypal- I don't have a Mexican bank account. I will be in Mexico, however, for over 11 months of the year). My question is, as this has turned into an almost full time job and I expect to make at least $20K in net profit, what, if anything, do I have to file with the Mexican authorities or in Mexico? 

If anyone has any experience with this in Mexico, it would be a huge help!

Thanks!

[Robert1160]

Maria, Did you get an answer on this? We bought a home in Tulum in January and are still trying to figure out if and how we pay taxes in Mexico. Do we need to pay the occupancy tax or does Airbnb do it? We live in the USA full time. 

[Sarah977]

@Robert1160    If- yes. You have a legal responsibility to pay taxes to Mexico on money earned in Mexico. There is not only occupancy tax, there is income tax. Because Mexico and the US have a tax treaty, you can't be double taxed- so if you end up paying 5% tax on your income in Mexico, and you're in a 15% tax bracket in the US, the 5% you were taxed in Mexico would be deducted from the US 15%. Do you have Mexican residency, or only come on tourist visa? 

How- you should get a Mexican accountant to advise you and help with this. You will need a Mexican tax number (RFC #), to get that, you need to have either temporary or permanent residency.

Of course, there's plenty of people doing this without being registered or reporting- it's a matter of doing this legally or not and if they ever catch up with you.

[Robert1160]

 We own a home in Tulum and Airbnb collects and pays the occupancy tax. We are US citizens and have a temporary Mexican Visa we just obtained last week. We will be in Tulum next week. Do we need to get a tax ID while there with our temporary visa?

[Sarah977]

@Robert1160   Yes, you need a Mexican tax number. You can either go to the SAT office for it, you can actually apply for it online, or you can hire an accountant.

And make sure you fill out that FMM form they give you on the plane correctly when you come down- best to ask the immigration agent at the airport in Mexico where you're flying into to help you with it, and show them your Temp. Resident paperwork. If you fill it out wrong, you can screw up your temp. residence and have to start over. And you do realize you have to finish the Temp. Resident process when you're down here, yes? All you get up north is the preliminary paperwork.

[Robert1160]

Thank you for your guidance. We need the temporary visa to get the tax ID? We were told that we need to stay in the country for 30 Days or the temporary visa will be void? We will not be staying a month as we are both still working in the USA full time. Can we apply for the tax ID online prior to completing our temporary visa process in Mexico?

[Sarah977]

@Robert1160  No, you have 30 days from when you enter Mexico to present yourself at the immigration office in Mexico. You need to go to the Immigration office, or hire an immigration lawyer or facilitator to do all this for you as soon as you get here. Then starts the process of finalizing your temporary residency. This can take longer than 30 days depending on the office. YOU CANNOT LEAVE MEXICO WHILE THIS IS IN PROCESS OR YOU WILL LOSE THE TEMPORARY RESIDENCY AND HAVE TO START THE PROCESS ALL OVER AT THE CONSULATE UP NORTH. You really need to inform yourself as to how all this works.

Once you have the temporary resident card in hand, you can apply for a tax number.

[Teresa1310]

@Sarah977  thank you for you counsel. We will need to start this process, however, I am still working and my husband is retired. He is able to be down there for extended periods and I can not. If I had not read your answer, we would have started to process prematurely. Thanks

Teresa