Job Discussion Forums

[Guy Courchesne]

[Samantha]

Trety...wrote:

[Tretyakovskii]

Some of them probably need it, Samantha; or, they're just hiding from past, "disgruntled" clients!

[Guy Courchesne]

Yep, you basically have it. It's all a big game.

My ex-wife filed her taxes each month and each month she would be able to get what she owed in IVA down to a single peso, by collecting facturas showing enough business expenses.

Question: does it not work the same way for a small business in the US for state sales tax? I know it must differ state to state but I would have expected something similar.

[Tretyakovskii]

Cool picture. You got any nose left, buddy? That kids probably big enough, by now, to do some real damage!
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On business expenses, as I understand it, you can deduct those from your gross receipts of fees for services you provided and reduce, thereby, the amount of ISR you will owe. But, IVA is another matter.

Taking facturas/recibos you'd received for business expenses- which disclose not only the amount you paid for the goods or services, but also the amount collected for IVA- you would then be able to deduct the IVA you had paid in connection with the business expense you'd incurred, from the IVA you would otherwise have to forward to the government of the sums of IVA you yourself had collected from your students.
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No one has yet commented on what's meant by the expression, "retencion IVA", a sum equal to 2/3s of the IVA you collect from your students.
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[Guy, I wasn't ignoring your question and comments about sales taxes: businesses get a deduction from gross receipts of the business for taxes paid. This is essentially different from what happens with IVA, but may be more of a difference in the way it's handled, than a real difference. I'm still waiting to understand the theory of IVA better, before I judge.]

[Phil_K]

Just to say, in the case of IVA, if you are a sole trader (persona f�sica actividades empresariales (or maybe, sin too, I don't know)), you can deduct not just BUSINESS generated IVA, but ALL IVA you have paid. Many people argue with me that this isn't true, but I do it and that is reflected in how much IVA I finally pay to the government.

[notamiss]

[Tretyakovskii]

Thanks, PhilK, and notamiss, for jumping in here.

The way the process of monthly declarations, coupled with a big, annual summation and declaration, is handled, makes me confident problems can easily be avoided.

IVA is not a tax you owe: it's a tax others have paid you, to be forwarded to the government, at the appropriate time. You are acting as an agent in the collection of this tax. Here's where it gets interesting: you may deduct from the sums of IVA you have collected, sums of IVA you've paid others. Whether this is limited to sums you've paid others in direct business expenses, or can be broader than that, is another question.

As for your comment, PhilK, about the broad range of purchases of goods and services you've made, which included sums for IVA- which may then be credited against IVA you'd otherwise have to forward to the government- I've run across people who see it the same way. One man put it this way, you're the main asset of your small business, and keeping you going is providing part of the support needed to maintain the business.

This concept is foreign to me as a tax concept, being more familiar with other systems, but seems to be widely accepted, here.
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To those who, like me, are new to this process-

When doing your tax declarations, it is my belief that the staff at SAT will be happy to tell you if they agree with your deductions from IVA, if you seek their assistance in the preparation of your declarations.

This was first stated on this forum by leslie, as I recall, and I've found it to be true, too.
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When is someone going to comment on, "retencion IVA"?

[Phil_K]

[Samantha]

My sentiments exactly. Find a recommended and trusted accountant and put your tax file into their hands to do what's best for your particular situation. Unless, of course, as PhilK says, you want to become an expert on taxes in Mexico, and in that case this is definitely not the forum for that.

[Tretyakovskii]

[notamiss]

This surely isn't what you want to hear, but I just do the arithmetic; calculating the retenci�n when I'm supposed to, without breaking my brain wondering what it means.

[Tretyakovskii]

Very practical man, notamiss!

But, do you then forward to the government the total of IVA you've collected, minus any offsetting IVA you've paid to others; or, the retencion IVA (2/3s of the IVA collected), minus any offsetting IVA you've paid to others?

Reply only if it's convenient to do so.

[notamiss]

I do what my accountant tells me, so I guess I'm doing what I supposed to.

By the way, I'm a female, so is my dog in my avatar. The screen name refers to the fact that I'm not a teacher.

[Tretyakovskii]

Sorry about the error, miss.

Maybe you should have posed the dog the other way round.

[I must have a bias, I had to be corrected about leslie's gender, too.]