Income Taxes in Mexico 2014 

Annual Income taxes 

by raul padilla, accountant, paa Padilla asesores y asociados

Annual Tax Return and Personal Deductions 2014
​The taxpayers who have to file an Annual Tax Return are the individuals who have obtained income, among others, for the following items: 
1.- Rendering of professional services
2.- Real estate rentals
3.- Entrepreneurial activities (commercial, industrial, farming, cattle, forest, fishing and transportation) except for the ones considered in the minor taxpayers regime (Régimen de incorporacion fiscal) because their tax payments are considered final in a bimonthly basis.
4.- Sell real estate.
5.- Buy or obtain goods even if are not subject to taxes,
6.- Receive salary more than $400,000.00 pesos or from 2 different or more employers.
7.- Receive interests and
​8.- Other income, for example; a debt cancelled by the creditor or paid by another person, for investments abroad, for late fees and/or conventional penalties, etc. 

​Income received within the year for the items and the amounts mentioned below have to be informed in the tax return, even when the corresponding tax or taxes had been paid: 

​Loans, prizes and donations income which, jointly or severally, exceed $600,000 pesos. 

​Tax exempted income for inheritance or legacy and for the sale of a dwelling residence, if the aggregate of the total income contained in the tax return exceed $500,000 pesos. 

​If you have the obligation to file an annual tax return due to any of the items above mentioned, in the annual calculation of the income tax, you may deduct the following items which can turn your taxes in favor and then request the reimbursement or compensation: 
* Medical, dental and hospital fees, for you, your spouse, or the person you cohabitate with and your children, grandchildren, parents or grandparents, provided they don’t have income exceeding one minimum annual wage. 
* Funerary expenses not exceeding one general minimum annual wage of the geographical area of the taxpayer, paid for the persons above mentioned.
* Devices for the recovery or rehabilitation of a patient, medication included in “facturas” issued by the hospitals, nurses and lab tests or prosthesis fees. They are also included expenses made to buy prescription glasses to correct visual defects, provided the characteristics of the same are described in the corresponding receipt issued in accordance with the fiscal provisions. When such characteristics are not described in the receipt, diagnose of the ophthalmologist or optometrist is required. 
* Donations granted to institutions authorized by the SAT to issue income tax deductible receipts, for example, Red Cross, Telethon or others. 
* Actual interests paid for mortgage loans for residential dwellings hired with entities of the financial system and the loan amount does not exceed one million five hundred investment units. 
* Complement retirement contributions to personal retirement plans or the sub-account of voluntary contributions, not exceeding five annual minimum wages. (Now, calculated at today’s rates $122,804.25 pesos) 
* Medical insurance premiums, provided the beneficiary is the same taxpayer, his/her spouse or the person he/he cohabits or his/her children, grandchildren, parents or grandfathers. 
* School transportation expenses will be deductible only when the school establish payment of this service as mandatory for all the students. 
​* The Decree on fiscal incentives to individuals allow to deduct school services (published in the Federal Official Gazette on February 15, 2011, and Regulation I.12.8.2 of RMF 2012) for the following amounts per student:

As you may know we have some changes in our legislation and tax reforms.   Many of us have to close the fiscal year 2014 so we have a short period of time to find out what else we will need to avoid or decrease taxes trough using our personal deductions so first we must get the income and tax withholding certifications (constancia de ingresos y retenciones), check out annual profits, etc. Anyway, get ready to file our annual tax return, given the fact that as of this time, the only taxpayers not obligated to submit it are the ones who have income lower than $400,000 pesos coming from one single employer. 

​In any event of payment of any income or expense with tax withholding it is important to get the corresponding format to credit them (it is imperative to have them on time for the tax return filing) 

​The law had some modifications that starts this year regarding the limit of personal deductions, because the article 151 of the  income tax law mentioned in a few words that  we can deduct only the to the top of $98,243.40 pesos or the  10% of the total income of the year (which the minor is).    

If you did not receive any income during the year, but you are registered in the RFC for any of the items stated above, you have to file an Annual Tax Return informing such situation, this is, to file your tax return in zeros.  

For more information Contact Raul Padilla:, ,