The Border Is Part of Daily Life
In El Paso, cross-border tax is not a specialist topic. Families cross the bridges to work, shop and visit relatives, companies run supply chains that pass through Juárez several times a day and many investors in El Paso real estate live in Mexico. BOMCAS prepares the U.S. side of these matters: federal and Texas returns, U.S. information forms and the records that support them. We work alongside Mexican accountants and lawyers, who handle Mexican filings. We also serve Canadians and Canadian companies with interests in El Paso.
Treaty and residency basics, with a focus on Canada, are on our Texas cross-border page. This page covers the Mexican border in El Paso.
Mexican Owners of U.S. Companies
A U.S. corporation that is 25 percent or more owned by a foreign person files Form 5472 with its return, reporting transactions with its owners and related parties, and a foreign-owned single-member LLC must also file it. Dividends paid to Mexican owners face U.S. withholding at rates that the U.S.–Mexico treaty can reduce, and interest and royalties have their own rates. The company also files the Texas franchise tax report like any other entity.
U.S. Owners of Mexican Companies
U.S. citizens and residents who own Mexican companies file Form 5471, and some of the company's income may be taxed in the U.S. each year, even without a distribution. A Mexican sociedad that is treated as a partnership or disregarded entity for U.S. purposes requires Form 8865 or 8858 instead. Choosing how the Mexican entity is classified for U.S. tax can make a large difference, and in some cases an election is available.
Families With Assets in Mexico
U.S. residents report foreign bank and investment accounts on FBAR when the combined balance exceeds $10,000 at any time in the year, and on Form 8938 at higher thresholds. Rental income from Mexican property is reported in the U.S., with depreciation and a credit for Mexican tax paid. Selling a Mexican house can produce a U.S. gain even when Mexico exempts the sale.
Mexican Residents Selling El Paso Property
When a nonresident sells El Paso real estate, FIRPTA generally requires the buyer to withhold 15 percent of the amount realised, with a reduced rate or exemption for some lower-priced homes the buyer will live in. The seller files a U.S. return to report the actual gain and claim back excess withholding. A withholding certificate obtained before closing can reduce the amount held. Nonresidents also need an ITIN to file.
Work Status and Residency
Mexican nationals working in El Paso under TN status or other visas become U.S. residents for tax once they meet the substantial presence test, which counts days in the U.S., including partial days. Daily commuters from Mexico who work in the U.S. may have their commuting days excluded from that count under a special rule. We review each person's days and status before choosing the return type.
Canadians in El Paso
Canadians who retire or work in El Paso, and Canadian companies supplying plants in Juárez through El Paso warehouses, deal with the same U.S. rules on residency, information returns and the Texas franchise tax. Our Canada–U.S. practice covers RRSPs, TFSAs, CPP and OAS and treaty positions for them.
Mexican Pensions and Retirement Accounts
Retirees living in El Paso who worked in Mexico may receive an IMSS pension or hold an Afore account. The U.S. treaty with Mexico generally allows the country of residence to tax pensions, and both items have to be reported on the U.S. return and on FBAR or Form 8938 where the thresholds are met. The treatment of each payment depends on its source, so we review the paperwork from the Mexican payer before including it.
Common Filings
- Forms 5471, 5472, 8865 and 8858.
- FBAR, Form 8938 and Form 3520.
- Form 1040-NR and ITIN applications.
- FIRPTA certificates and refunds.
- Form 8833 treaty statements.
El Paso Cross-Border Tax Questions
Does a U.S. company owned by Mexican residents file extra forms?
Yes, Form 5472 if foreign persons own 25 percent or more, along with the usual federal and Texas returns.
Do commuters from Juárez become U.S. tax residents?
Days spent commuting from Mexico to work in the U.S. can be excluded from the substantial presence test under a special rule.
Is a Mexican house sale taxable in the U.S.?
It can be, for U.S. residents, even if Mexico exempts it. A credit for any Mexican tax may apply.
Do you file Mexican returns?
No. We prepare U.S. filings and work with Mexican accountants for the Mexican side.
Talk to BOMCAS About Cross-Border Tax in El Paso
Foreign-owned companies still file the business return, and residents file personal returns on worldwide income. Sales tax, bookkeeping and payroll run here as usual. Plan ownership changes in advance, and use late filing for missed forms. Our state pages on business returns, individual returns, sales tax, bookkeeping, payroll, planning and catching up explain the Texas rules away from the border, and the Texas overview summarises them.
Tell BOMCAS about your El Paso company or household and we will explain what we would do first and which papers would let us quote. Reach us through the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every El Paso service is on the El Paso overview. This page offers general information only, not advice for your case.