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Ok, thanks. So, since I don't have any other income, and I have 21,000 in the 401k, what would be the tax bracket I would fall into?
If you are a Non-Resident alien, and you are single, about half of that amount is taxed at 10% and the rest at 15%. The tax bracket changes at $8700 of taxable income from 10% to 15%.
If you take about half out in one year and the rest in the following year, you will stay in the 10% bracket.
Awesome! Just one more thing, reading the United States - Mexico Income Tax Convention (Found here: http://www.irs.gov/pub/irs-trty/mexico.pdf) it has some parts that caught my attention: Article 15 is about Dependable Personal Services and it says in part 2: "
Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in a 12 month period" And also Article 17: Limitation of Benefits: "
1. A person that is a resident of a Contracting State and derives income from the other Contracting State shall be entitled under this Convention to relief from taxation in that other Contracting State only if such person is:
a) an individual;" Do you think I can use any of these articles in the W8BEN form for a reduced rate? Thanks and that would be all.
You may be eligible for relief from double taxation in Mexico, but you would owe the US tax first. There is no reduced rate on the US side.