Whether you’re administering business in Mexico or you have loved ones residing there, the reasons you might need to send money to Mexico are as numerous as they are diverse. Therefore it’s necessary to understand the tax implications of transferring funds from out the US and into Mexico.
Foremost, it’s crucial to remember that it’s an IRS requirement to report any financial exchange over $10,000. Should you fail to disclose this transfer, you could be facing steep penalties, even jail time.
What Are the Laws to Send Money to Mexico?
As for the laws in Mexico, the government will not levy a tax on large inheritance, estate, or gifts transferred into the country at the time of the transfer, but the recipient may have to report the transfer as income when he files a tax return. If you are gifting to your child, spouse, or parents -Mexican tax law does exempt these types of gifts. If, however, the government discovers that the assets have been gifted to someone else, those funds are not considered exempt.
If your recipient doesn’t fall into the categories named above and fails to disclose the transfer on her income taxes, she could be facing tax evasion charges in Mexico. However, if the wire recipient can demonstrate that the failure to file was accidental, and not intentional, the taxes due must be paid along with any associated penalties. If it’s found that the Mexican recipient is negligible in willfully failing to disclose, she could be subject to criminal proceedings.
How Much Money Can I Send to Mexico?
If you’re wondering exactly how much money you can transfer out of the US, that is an important consideration. Generally speaking, if you transfer a gift valued at more than $15,000 to a foreign account in your name, and the account is already funded with a balance of more than $10,000, you will have to report this on your annual tax return. Likewise, you must inform the IRS if you are sending more than $10,000 out of the country as a business.
Banks in the US are legally obligated to report cash transactions coming in and out of the country. Money transfer companies, on the other hand, can be held to much lower reporting requirements, with thresholds as low as $1000. Given there’s so much scrutiny over money coming in and out of the country, it’s likely the case that you’ll be discovered if you fail to report any large amount of money you’ve transferred out of the US.
How Can My Recipient In Mexico Get the Money?
With that mentioned, you might be wondering how the recipient receives your funds. There are several options to choose from including mobile wallets, direct bank transfers, and cash-pickup. Whichever method you select, it’s important that you only send money to those you know to avert the prospects of fraud.
Ultimately, when it comes to sending money to Mexico, their regulatory environment is fairly relaxed. Your recipient won’t have to fill out additional forms and should find it rather simple to receive the funds, regardless of which method of transfer you select.