New US Citizen previous mexican retirement account

Discussion in 'US Taxes' started by TheHermit, Jul 27, 2008.

  1. TheHermit

    TheHermit Guest

    Here's the situation:

    Wife was teacher in mexican federal school and a mexican citizen.
    They have AFORES retirement account where you contribute a portion of your
    salary.
    She contributed all money in account while mexican citizen.
    She could not take any money out untill 55 years of age.
    We married and she quit her job and no further money was put into account.
    She became a US citizen and now over 55 can take her Mexican retirement
    account money out.
    Is that retirement money taxable in US?
     
    TheHermit, Jul 27, 2008
    #1
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  2. TheHermit

    TheHermit Guest

    Can you point me to IRS publication? or other that takes this into account?
     
    TheHermit, Jul 27, 2008
    #2
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  3. TheHermit

    Capt. Tuttle Guest

    TheHermit used his keyboard to write :

    I just went through something just like this.
    The best answer from the IRS was "maybe".
    I paid a tax expert to give me an answer.
    The best information I can give you is to first ask: Does she pay taxes
    to Mexico on the payment?
    From the answer to that question you can begin your search through the
    tax treaty we have with Mexico.
    http://www.ustreas.gov/offices/tax-policy/treaties.shtml#mexico
    I will add good luck!!
     
    Capt. Tuttle, Jul 27, 2008
    #3
  4. TheHermit

    P. Maffia Guest

    Yes!
     
    P. Maffia, Jul 27, 2008
    #4
  5. TheHermit

    D. Stussy Guest

    Yes. As a U.S. citizen, she is taxed on her WORLDWIDE income.

    See also "foreign tax credit" if Mexico would also tax it (and whether
    there's a treaty provision that exempts it from Mexican taxes).
     
    D. Stussy, Jul 27, 2008
    #5
  6. TheHermit

    TheHermit Guest

    Ok, if it is taxable and if the money is distributed how about the
    following.

    Being that the money is in a mexican retirement fund can we then rollover
    the distribution to a US retirement fund like an IRA and protect the money
    from being taxed immidiately?

    Maybe even getting part of the money distributed (and taxed in US) and part
    of it rolled over!

    And being that Mexico did tax the money can we not put in for a tax credit!

    Thank you for your input.
     
    TheHermit, Jul 28, 2008
    #6
  7. TheHermit

    TheHermit Guest

    Ok, if it is taxable and if the money is distributed how about the
    following.

    Being that the money is in a mexican retirement fund can we then rollover
    the distribution to a US retirement fund like an IRA and protect the money
    from being taxed immidiately?

    Maybe even getting part of the money distributed (and taxed in US) and part
    of it rolled over!

    And being that Mexico did tax the money can we not put in for a tax credit!

    Thank you for your input.
     
    TheHermit, Jul 28, 2008
    #7
  8. TheHermit

    TheHermit Guest

    Bad news

    You cannot roll over mexican retirement account money to IRA in US per
    Fidelity Investments
     
    TheHermit, Jul 28, 2008
    #8
  9. TheHermit

    Capt. Tuttle Guest

    TheHermit wrote :
    I did not realize you wanted to move the money into the U.S. I'm sure
    if you do that you will pay taxes one way or another. I thought you
    were talking about periodic payments. In our case the money is sent to
    our bank in the U.S., but is not taxable income thanks to the tax
    treaty.
    You probably should talk to a tax pro who can try to read all the mess
    that is involved in the tax treaties. It really is a mess.
    My CPA takes her taxes to a tax attorney!
     
    Capt. Tuttle, Aug 3, 2008
    #9
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