Get ready for your 2021 annual tax declaration

10-February-2021

It is a popular saying in the United States that there is one thing that no person can avoid: “Death and taxes”. Although it seems slightly dramatic to apply in Mexico, the ironclad enforcement that has been adopted by the Ministry of Finance and Public Credit (SHCP) hand in hand with the Tax Administration Service (SAT), seem to be going to turn it into a saying that also applies in our country.

With tax reforms, the implementation of the tax mailbox and the insistence on tax returns for large taxpayers, the SAT broke the tax collection record in the last 10 years, generating 14.5% of the country's Gross Domestic Product.

According to SAT's declaration of intentions, this year they want to continue on the path of increasing tax collection and the first fiscal process of 2021 will be the annual tax declaration for individuals and corporations. Below we tell you what you should know to be prepared to make your annual tax return 2021 and the importance of having tax and accounting advice to avoid problems with the SAT.

Who should file their tax declaration and when?

The 2021 annual tax declaration includes declaring the income that an individual or legal entity received during the year in order to determine the taxes that must be paid to the federal tax authority. In order to calculate taxes, this declaration also includes personal deductions, withholding and payments made to the SAT during the year.

In this way, according to the income and deductions of 2020, the SAT determines the taxes that you must pay and the refunds that will be made in case you qualify. The 2021 annual tax declaration is due in April for individuals and March for corporations, unless the SAT announces a change of dates due to the current pandemic.

The first thing you should know is the tax regime to which you belong. There are two main groups in which these regimes are divided, individuals and corporations. In the case of legal entities, all of them are obliged to file this tax declaration.

This is not the case for individuals. The following is a list of those who must file this tax return.

Individuals:

If you are a salaried employee, but you worked for more than one employer at the same time, or if you had income from other sources than your job with a salary.

If you were a lessor of real estate, regardless of the amount of rent paid to you.

If you worked as a self-employed professional and received fees. Remember that if you are a freelancer you must issue receipts for the work you performed in order to file your tax return.

If you bought or sold real estate during the year, you must calculate the amount of income tax and declare it.

If you received income from financial investments, you must also file your 2021 annual tax return.

If your income was higher than 400 thousand pesos, even if you are a salaried employee, and you only have one source of income.

If you are engaged in commercial activities, such as owning restaurants, hairdressing salons, mechanical workshops, clothing stores and a long etcetera. If you are the owner of this type of establishment, you must file your tax declaration with the SAT.

Remember that the deadline for filing tax declarations is April 30 for individuals and March 31 for corporations.

Your 2021 annual tax declaration is simpler with tax advisory services

In order to increase tax collection, the SAT has put a lot of resources into updating its digital technology to encourage taxpayers to comply with their tax obligations. You can complete the entire process of your annual tax declaration through the same SAT portal, without having to schedule an appointment and from the comfort of your home or office.

However, this convenience does not guarantee that you are doing your return correctly. Filing your return with errors or incomplete data can have different consequences, from a simple requirement to correct your data, to not receiving a tax refund according to what you are entitled to, to fines and even prison for not complying correctly with your tax obligations.

To avoid these setbacks, it is highly recommended having tax advice, so that they can guide you on the best way to meet your obligations with the authority. And beyond the paperwork, tax advice allows you to create financial strategies to be prepared for this moment.

TRIMONIUM's tax advisory services will help you devise the best way to comply with your tax obligations in addition to protecting your assets and avoiding business failure due to the payment of taxes. We will guide you on the expenses you can deduct and the expenses you can and/or should avoid in order not to empty your coffers. Contact us and get ready for your annual tax return 2021.