In reference to question you answered about a year ago regarding interest
paid to family members who are Non-Residents of the U.S. (Mexican), you stated that U.S. citizens have to withhold funds and they have to file a NR-return
(I am assuming 15% for Mexico). I found the following information:
26 U.S.C § 6049
(1) General rule For purposes of subsection (a), the term “interest” means—
(A) interest on any obligation—
(not applicable)(i) issued in registered form
(not applicable)(ii) of a type offered to the public,
other than any obligation with a maturity (at issue) of not more than 1 year which is held by a corporation,
(not applicable)(B,C,D,E,F) ...
may be (G) to the extent provided in regulations
prescribed by the Secretary, any other interest (which is not described in paragraph (2)).
However P2 states
(2) Exceptions-For purposes of subsection (a), the term “interest” does not include—
(A) interest on any obligation issued by a natural person..
is there an exception for income
payable to non-residents in the regulations, I cannot find such exception.
Can you help?
There are 5 siblings in a family. 3 of the siblings live in Mexico and are Mexican citizens. 2 siblings live in the US
and are US citizens. 1 of the Mexican citizens is mentally disabled and is cared by the family. This person has property
in Mexico too. A couple of family investments were liquidated and some of the funds were loaned to all the siblings to pay off regular debt. The siblings have decided to return those funds to a fund that can be used to support the future living expenses of the sibling with a disability
. However, since last year the 2 U.S. citizens have agreed to receive funds and pay a contribution, which could be considered interest, in the repayment of such loans. The owner of the funds is ultimately the Mexican citizen, but she has not received actual payments. Instead, the payment of the funds has gone to cover some of the father of siblings’ debt, who until now has acted as the executor of the owner of the funds or to other members of the family who have borrowed funds from payments. Furthermore, the sibling also has debt to Mexican credit
issuers that assess interest on a portion of the funds that is being used as loans to U.S. siblings. Total amount of loans is 100,000 USD. Interest accruing at 6%
Need help with U.S. determining reporting
requirements for the interest being paid to the Mexican sibling, tax withholding
for US citizens making interest payments to non-us residents.
Curve ball: Payments have been made to Father's insurance policy totaling $3600 for the year. No payment has been issued to sister yet, but continues to accrue