Here’s what to know about taxes when sending large transfers to friends and family.
How Mexico regulates large remittances
Mexico doesn’t levy specific inheritance, estate or gift taxes on large amounts of money transferred into the country. In short, you can send as much as you’d like to friends and family without triggering a gift or income tax.
The only situation in which your recipient might pay a gift tax is if you’re gifting real estate. In that case, gifts of real estate to children or spouses are exempt. All other gifts of real estate are subject to taxation.
How will President Trump’s proposal to tax remittances to Mexico affect my money?
Politics may put a wrinkle in the $24.6 billion dollars sent over the border to friends and family to the south. The Trump administration is moving forward with fulfilling its campaign promises to build a border wall between the US and Mexico.
In 2017, Congress submitted a bill proposing a 2% tax on remittances to Latin American countries that include Mexico, Brazil, Honduras and El Salvador — a tax that’s a significant key to funding the wall. We’ll update this page as details are finalized.
Do I have to report large transfers out of the US?
You’re required to abide by US laws if you’re sending more than $10,000 to Mexico. By law, banks report cash transactions into and out of the country. Money transfer companies are sometimes held to reporting thresholds as low as $1,000.
With so much attention paid to money entering and leaving the country, the government will likely discover if you fail to report large sums out of the US.
How will my recipient receive my remittance in Mexico?
How your friends and family receive your money transfer depends on the provider and method you’ve used to deliver it. Your recipient may need to show ID or a transaction number to pick up your funds in person.
If your recipient has received a prior transfer at the Mexican bank or money transfer provider you’ve sent your money to, they may not need to provide any details to receive it.
As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.