Debunking the Separation Myth | US International Tax Lawyer Alvarado Veracruz Mexico
Hello and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.
Today, I’m continuing my series of vlogs from Alvarado, Mexico and in this vlog I’d like to focus on what I call the separation myth. Basically a belief that if you reside, that you only need to report income in the jurisdiction where it was earned and only in that jurisdiction; that’s why it’s a separation myth. Basically, you separate your income by jurisdiction where it was earned and reported only in that jurisdiction.
This is a very common myth. I receive clients every single month who believe in this myth; actually, I have already lost count of how many people have come to me and said “Oh, you know what? I thought that everything that I had in Mexico is really only relevant to Mexico and everything we have in the United States is only relevant to the United States”. Or “Everything we have in Thailand is only relevant to Thailand and everything in the United States is only relevant to the United States”. “Everything in France is relevant only to France and everything I earn in the United States is only relevant to the United States” and “I’ve always disclosed my US-sourced income on my US tax returns and my foreign income either was not disclosed at all anywhere because it was not required to be so or it was disclosed on local tax returns”.
This myth is completely wrong. If you are a US person; if you are a US tax resident to be more exact, then you must disclose your worldwide income on your US tax returns. It’s not a matter of choice, it’s an obligation and it is absolute.
The only exceptions, and there are few, are contained in some tax treaties, most commonly in the US-France tax treaty. Otherwise, the income must be disclosed on US tax returns if you are a US tax resident.
Be careful and do not fall victim to this myth. In the next vlog, I will continue debunking common myths concerning US tax compliance.
Thank you for watching, until the next time.
