The house in MX is kept separate. It is not involved in anything to do with the U.S.
If you father was US citizen or a legal resident - all his properties should be included into estate regardless if they are in the US or abroad.
If your father was neither US citizen nor a legal resident - only US part of the estate would be included for US tax purposes.
My questions are: How do I reimburse my self for expenses I incurred from handling the estate without getting taxed as personal income? I was in MX for 3 months taking care of things using my own money...now that I am dividing assets in the U.S., I need to reimburse myself tax free for debts I have incurred which are approximately 16K.
If you paid some bills on behalf of the estate - you simply provide expense report to the estate and get reimbursed for such expenses - such reimbursement would not be your personal taxable income.
If you receive a compensation from the estate for your personal expenses in connection with your duty as an executor of the estate - for instance - travel expenses - you also may provide expense report with all receipts, etc - and such reimbursement will not be your personal taxable income.
If you receive from the estate - a compensation for your work as an executor - that would be your personal taxable income.
Second, I need to be able to take care of the house costs in MX along with care for their 2 dogs. I have no clue when we will be able to sell the house because of the economy and the swine flu which has flattened the MX market for home sales...I am estimating needing 10K set aside for maint. If I take this as personal income, then I will be taxed
If the estate has any funds to be used for maintenance - you may use these funds.
If the estate doesn't have enough funds - it should borrow for bank or from beneficiaries, or from any other source.
You may lend the money to the estate from you own funds - that will not be considered a taxable income for the estate, but you may not deduct that on your tax return regardless if the estate will pay you back later of will not be able to pay you back.
If you take a distribution from the inherited IRA and use that money for the estate - it will be taxable income - either for the estate or for beneficiaries - regardless if funds are used for the estate maintenance.