HI, I live in Tijuana, a border city with San Diego,California. I am a dentist and provide my services in my dental office in Tijuana to american patients that some times use their insurance coverage. In order for the american insurances to release the payment, I needed a TIN, so I got it. The insurance companies know that the services are being provided in Mexico. It seems that the IRS thinks that I should pay taxes on that income. What is your opinion?
Hello mafalda, Can you tell me if the IRS has actually notified you that you owe tax in the US or have you been told this by the insurance companies? Are you a US citizen? Merlo40033.9737451389
Hi again,Yes, the IRS has sent me some forms and even telling me how much I owe, I have replied to them explaining that, since the services are rendered in México, and I pay taxes in my country, I believe I should not pay taxes to the US gvmt. They had replied that they have not made a decision, and months later they sent another letter with the same, I owe them money. I am not a US citizen or resident.
Hello mafalda, If you are not a US citizen, and you are not performing services here in this country, then you should not be subject to US tax on this income. I am givng you a link below to a section of the IRS website which discusses taxation on nonresident alients. This page has a chart which shows you the factors that determine your source of income. You will see in that chart that Business income for personal services is based on where the services are performed. http://www.irs.gov/businesses/small/international/article/0,,id=96459,00.html Here is also a link to Publication 519 which discusses tax for for aliens. Refer in particular to Chapter 2, Source of Income. http://www.irs.gov/publications/p519/index.html Sometimes it can be difficult dealing with the IRS, as not all of their representatives are totally familiar with each and every tax regulation. You should try contacting them and ask to speak with someone who is familiar with nonresident alien income regulations. It could be that the insurance companies who have sent you payments have reported this in error the IRS as taxable income being paid to a foreign person, so you may want to check with the insurance companies as well. If this was helpful please press the Accept button. Positive feedback is also appreciated. Thank you mafalda.
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad