Planning Across Two Countries and Two States
For many El Paso owners, the most important tax decisions are about geography: which side of the border to hold assets, profits and employees on, and whether to locate a new warehouse in Texas or a few miles away in New Mexico. Families face similar choices with homes, savings and inheritances in Mexico. Texas has no income tax and no estate tax, which helps, but federal and Mexican rules still shape the result. BOMCAS works on these plans remotely with clients and their Mexican and New Mexico advisers.
Statewide planning is on the Texas tax planning page. This page is about border structures, location choices and military transitions in El Paso.
Structuring a Cross-Border Group
An El Paso company with a plant or affiliate in Juárez can be the parent, the sister company or the customer of the Mexican entity, and each arrangement brings different U.S. tax. A U.S. parent may have income from its Mexican subsidiary taxed currently under the controlled foreign corporation rules, while a U.S. company owned by Mexican residents files Form 5472 and may owe withholding tax on payments to its owners. We work through the structure with the client's Mexican adviser before contracts are signed or ownership changes.
Nearshoring and Expansion
Companies moving production from Asia to Mexico have brought new warehouses, distribution and service operations to El Paso. A business planning to expand should look at bonus depreciation and Section 179 for equipment, cost segregation for new buildings, the freeport exemption for inventory and any local incentive agreements, and compare them with the costs of operating across the line in New Mexico, where gross receipts tax and state income tax apply.
Leaving the Army
Soldiers separating or retiring at Fort Bliss face a crowded tax year: final pay, leave sold back, separation pay, retired pay starting, a new civilian job and TSP decisions. Many stay in El Paso because Texas does not tax retired pay. VA disability compensation is not taxable, and a later rating increase may allow amended returns. Disabled veterans may qualify for property tax exemptions on their homes.
Family Assets in Mexico
U.S. residents who own houses, land, accounts or business interests in Mexico need to plan for both countries' rules on sale, gift and inheritance. Mexico taxes many transfers differently from the U.S., and U.S. residents report foreign gifts and inheritances over $100,000 on Form 3520. Planning ahead avoids double tax and reporting penalties.
Retirement and Property Tax
Retirees and older homeowners in El Paso can lower property tax through the homestead exemption, the over-65 exemption and the school tax ceiling for older homeowners. Protests to the El Paso Central Appraisal District are generally due by May 15. On the federal side, managing pension, Social Security and IRA withdrawals can keep income in lower brackets.
Selling a Border Business
Many El Paso logistics, brokerage and distribution companies were built by one family and are now attracting buyers, sometimes from Mexico or from larger U.S. groups. An asset sale and a stock sale produce very different results for the seller, and the price allocation decides how much is taxed as capital gain and how much as ordinary income from recaptured depreciation. Installment terms, earn-outs and a seller who will keep working for the buyer all need attention before the letter of intent is signed. When the buyer is foreign, the seller also needs to understand what U.S. reporting and withholding the buyer must handle.
What a Plan Covers
- Group structure and U.S. reporting.
- Location choices between Texas and New Mexico.
- Expansion and equipment timing.
- Military transition and retirement.
- Cross-border family assets.
El Paso Tax Planning Questions
Should our Juárez plant be owned by our El Paso company?
It depends on the business. A U.S. parent may be taxed currently on some foreign income, so we model the options with your Mexican adviser.
Is it better to put a new warehouse in Texas or New Mexico?
It depends on the business. New Mexico has income and gross receipts taxes, while Texas has the franchise tax and its own property tax rules.
Does Texas tax military retired pay?
No. Texas has no income tax, though retired pay is federally taxable.
Do I report an inheritance from Mexico?
Yes, on Form 3520 if gifts or inheritances from foreign persons exceed $100,000 in a year.
Talk to BOMCAS About Tax Planning in El Paso
Planning needs current books and filed business and personal returns. Decisions are carried out through payroll and purchases that affect use tax. Settle missed filings before restructuring, and coordinate U.S. and Mexican reporting. Our state pages on business returns, individual returns, sales tax, bookkeeping, payroll, catching up and international filings 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.