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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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HI I am trying to ascertain what tax I am liable to pay in

Resolved Question:

HI I am trying to ascertain what tax I am liable to pay in the US as a greencard holder (lawful permanent resident).
My foreign corporation (I own 99%, (the other 1% is owned by an US resident)) made a profit in 2008 of Mexican pesos 700 000 (about 53 000$) according to my Mexican tax report of 2008 from the sale of land - no house or structure on the land.   This is after I paid my Mexican taxes.
What is the US tax on this?
What form(s) do I have to file and when is the deadline? If I have missed the deadline can I still file for 2008 and pay a penalty??
Also what is the amount I have to pay in US taxes for personal income gained from my job in Mexico?
Thank you.
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
Hello fiona,

If you are a permanent resident, green card holder, then you are subject to the same tax laws as US citizens. That means that you must report and pay taxes on your income from any sources worldwide.

Taxes in the US are filed on a calendar year basis. Tax returns are always due on April 15th following the tax year for which the tax applies. So your 2008 tax return due date was 4/15/09. You may still file your 2008 return, but if you owe any taxes, then some interest and penalties will also be assessed for the late filing.

Taxes in the United States are assessed on a graduated scale, and the percentage of tax which you owe will increase as your income increases. Taxpayers who have higher income are in higher brackets. Your ultimate tax liability also depends on your filing status (married or single) and how many children or other dependents you claim, as you are allowed exemptions based on these factors.

The sale of property that you made is taxed differently than ordinary income from wages. The sale of property that you have held for more than one year is taxed as a long term capital gain which currently carries a maximum tax rate of 15%. Your ordinary income from a job is taxed at rates of 0% to 35% depending on your total income, filing status and dependents you claim.

Once you fill out the tax forms and determine what tax is owed here in the US, you will also be allowed to claim a credit for any taxes you already paid to Mexico on this same income. This will help reduce or even eliminate any tax that you may owe here in the US on that same income.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you fiona.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you
Customer: replied 4 years ago.
HI - What forms do I need to file for my Mexican corportation and as an individual???
Expert:  Merlo replied 4 years ago.
Hello fiona,

As a green card holder, you will file the same form as US citizens which is Form 1040 for your personal return.

The income you receive from your Mexican Corporation should be included on your Form 1040. You will not file a separate return for your Mexican Corporation if it is not a corporation organized here in the US.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you fiona.

Customer: replied 4 years ago.
Hmmmm I am just double checking this - what about the form 1120-F (U.S. Income Tax Return of a Foreign Corporation) , or Form 5471 for (U.S. Shareholders of Foreign Corporations)   ???     Thanks Fiona
Expert:  Merlo replied 4 years ago.
Hello again fiona,



That form is for foreign individuals who have established a business here in the United States. It does not apply to a foreign corporation that you have in Mexico.



You must report the income from your foreign corporation on your personal return and pay tax on that income, but the corporation itself does not actually file a return unless it is established and doing business here in the US.



If this was helpful please press the Accept button. Positive feedback is also appreciated.



Thank you fiona.



Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you

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