Annual tax return 2023: complete step-by-step guide

The annual tax return 2023 declaration is a fiscal obligation for taxpayers in Mexico,

in which we report our income obtained during the previous year before the SAT, in order to

pay the annual amount that corresponds to Income Tax.

Taxes! This word worries many people who, by not knowing the process to declare them, are usually predisposed to this type of procedure. That is why in this article, I will tell you

everything you need to know about the  annual tax return , who must file it, when is the

2023 annual return  and the best: how to do it step by step!

So, relax and take note so that you can check if you have the necessary documentation to

carry out this process —as well as who to go to if you are missing something— and consult

our tips so that you know how to make the 2023 annual declaration  in a simple way.

Forward!

What is the annual tax return?

The easiest way to understand what the annual tax return is as the document with which

you report to a tax agency —in the case of Mexico, the Tax Administration Service (SAT) — your income, deductions, and withholdings, in order to to declare in a timely manner the Income Tax (ISR) applicable to a fiscal year.

In other words, it is the procedure that tells the Treasury how much money you received for your work or business activities and what percentage of that amount corresponds to contributing to the collection of taxes , in addition to how much will be returned or paid to you.

This tax burden is mandatory, as part of the responsibilities of taxpayers in Mexico —with some exceptions— and is legally supported by Article 31 of our Constitution, which says that an

obligation of Mexicans is:

Contribute to public expenses, as well as the Federation, as well as the States, Mexico City and

the Municipality in which they reside, in the proportional and equitable manner provided by law.

More specifically, the mechanism for collection, documentation and exemptions are

contemplated within the Income Tax Law , which I will use to impress you, but above all as a reference throughout this article.

Who does annual tax return?

The annual tax declaration is an obligation that must be carried out, both by

natural and legal persons , in order to report their income and fiscal situation for a specific year.

Although it is a mandatory process for all taxpayers, the law establishes who within these two types of people must declare, based on a series of criteria that we will see below.

To better understand the 2023 annual return for individuals , let’s review Article 150 of the Income Tax Law :

Individuals who earn income in a calendar year, with the exception of those who are exempt

and for whom final tax has been paid, are required to pay their annual tax by means of a

declaration that they will submit in April of the following year, before authorized offices.

However, the annual declaration for natural persons 2023  is relevant for those who

carry out business and professional activities for which they received income last year.

So, if you meet any of these criteria, you have to file an annual tax return:

• You carried out professional activities for a company that pays you a salary and the amount  of that income exceeds $400,000 MXN gross (before taxes) per year.
• You had income as a freelancer for fees.
• You received payment from two employers, even if the sum of everything does not exceed $400,000 MXN gross per year.
• You received income from labor compensation, liquidation, pension or retirement.
• You won the prize of a raffle, contest or raffle such as Pronósticos or the National Lottery  (and what envy, by the way).
• You receive interest on investments or financial funds that exceed $100,000 MXN gross per year.
• You received rent from a property.

Article 7 of the Income Tax Law identifies as legal persons —and therefore, they qualify to file an annual tax return—:

• commercial companies
• Decentralized organizations with business activities
• credit institutions
• Societies and civil associations
• Joint venture if you carry out business activities in Mexico
• cooperative societies
• Finance system
• Trusts with business activity

Also, I invite you to read our article that explains the difference between a natural person and a moral person , in case you want to review this point in detail.

When is the 2023 annual declaration made?

The period for individuals to make their 2023 annual declaration  in Mexico will be from April 1 to 30 . In the case of legal entities, their period to comply with this obligation is from March 1 to 31 . Write down in your diary when the 2023 annual declaration is made  so as not to forget it.

Remember that the declaration is always made the year after the end of the fiscal year or period —which corresponds to the calendar year that has just passed—, within periods and with processes established by the SAT.

So, the annual statement for one year corresponds to your income and deductions from the previous year. In other words, the 2023 annual statement  corresponds to the income you received during 2022.

What expenses can I deduct in my 2023 annual statement?

If you are a natural person, the personal expenses that you can deduct in your 2023 annual return , according to Article 151 of the Income Tax Law, are:

• Medical and dental expenses and fees
• Funeral expenses
• Non-remunerative, non-remunerative donations
• Interest on mortgage loans
• Complementary withdrawal contributions made to your corresponding subaccount
• Premiums for medical expenses insurance
• School transportation of direct descendants
• Payments made for local wage income tax

How to make the 2023 annual declaration?

To present your 2023 annual declaration  as a natural person, you need to have your current documentation and tax codes , as well as the billing information in case you want to apply for a deduction or refund, and visit the SAT portal . With these clear starting points, it will be easier to understand how to file the annual return .

If you have any doubts about how to register with the Treasury, I invite you to read our article How to register in the SAT where we give you detailed information on the process.

Like any procedure, making the 2023 annual declaration  is much easier if you first know the necessary elements to comply with the procedure, then you analyze the process step by step, to finally review tips that help you make everything easier.

To file the 2023 annual return for individuals  you will need the following:

• Have a current Federal Taxpayer Registry (RFC).
• SAT password or e.firma.
• Billing of personal expenses (if any deduction is applied).
• Evidence of perceptions and withholdings (necessary for employees who wish to compare pre-filled information or request any deduction).
• CLABE of the taxpayer’s bank account (to request that the balance in favor be transferred).

1. Enter the SAT portal, in the ‘People’ tab .
2. Click on ‘Tax Mailbox’ (A) .
3. On the Password Access page, enter your RFC, SAT password or e.firma and then the captcha code (B) .
4. Once inside, click on ‘Declarations’, and once again on ‘Submit your Annual Declaration for Individuals’ (C) .
5. Click on ‘Submit a return’ (D) .
6. Inside, select the year (2023 in this case), the type of declaration (normal) and in period, leave ‘Of the Year’ (E).
7. Enter the data requested by the declaration and answer the questions related to your income. This information will depend both on the tax regime that corresponds to you, as well as on the income you receive.
8. If you wish to deduct, use the invoiced documentation of personal expenses in the corresponding section (you will need to upload the files of the invoices to be deducted).
9. In the event that you detect an error in the pre-filled information (due to invoices you provided or, in the case of being an employee, due to the information provided by your employers), correct it with the receipts and withholdings record. You will be asked to upload a copy of the document to the system.
10. If you have a balance in your favour, the system will give you the option of receiving that balance by transfer (it will ask you for an interbank CLABE) or keeping it as a balance for the following financial year (2023).
11. Once the declaration is finished, sign it and send it.
12. Obtain your acknowledgment of receipt (download it in PDF).

On the ‘Annual Declaration’ page, you will find four useful options for your annual tax declaration :

• Submit a declaration: this is where you start the process, just as we saw in the step by step.
• Consult tax return: find out the status of a tax return already filed or if you filed a supplementary tax return.
• Printing of the Acknowledgment: in case you have not saved your receipt the first time.
• Paid statements: if you used capture lines to pay a balance against, in this part you review the status of those payments or statements from previous years.

• If you need to clarify more specific doubts, the SAT has some tutorials on YouTube to make your 2023 annual declaration,  such as this one dedicated to natural persons with wages, salaries and similar and interests:
• In case you need any document for access, visit SAT ID . There you can generate your password for the SAT site , renew your e.Firma , obtain your Evidence of tax situation with CIF and know the requirements for each of these procedures.
• Use the capture lines to settle the balance against (if you have it) and pay the amount in the bank or by electronic transfer. Once the payment has been made, enter the receipt data into the system and obtain your acknowledgment of receipt.
• Review all the data calmly, but do not leave the session idle for a long interval because the system will close it and if you did not save, you will have to start again.
• If you made a mistake when filling out the declaration or some document was missing, it is possible to use the ‘Complementary declaration’ option , when filling in the Type of declaration, and send any correction or missing invoice.
• The SAT annual tax return page  includes a Frequently Asked Questions session with a downloadable document. Review it if you have specific questions about your regimen or what you can deduct.
• An essential part of the process of how to file an annual return is to read the process and understand all the documentation you will need. Check that you have everything you need before starting.
• Although the process is simple once you have the documentation and the knowledge of the step by step, rely on an accounting expert for more complex issues such as deductions (if applicable or not) or requests for returns.

📢 Tip: do not despair if the portal pages take time to load or you cannot enter the site. Both the first days of the period to make the declaration and the last ones are the most saturated by users who want to use the system. Take advantage of a quiet morning or night during the weekend to carry out the process.

Now that you know how to file the 2023 annual return , surely everything will be easier with these tips.

How do I use the SAT simulator?

The SAT Economic Activities and Tax Obligations Questionnaire Simulator helps you to know exactly the tax obligations that you must comply with according to the type of professional or business activities that you carry out, such as the 2023 SAT tax return , for example.

The questionnaire is very simple and in a matter of minutes you will know if you must submit monthly or annual returns and information on the type of person (physical or moral) to which you belong.

The steps to use the SAT Simulator are the following:

1. Go to the SAT Simulator page .
2. Select if you are a natural or legal person and enter the captcha code. Click ‘Continue’.
3. Answer the questions regarding your income, where it comes from and the percentage that each item represents in your total earnings.
4. Obtain the obligations that correspond to you, according to the information you gave.

What happens if I have not declared in the Treasury?

Not making your annual tax return properly can have consequences that range from surcharges for not complying with the official deadlines and fines for non-compliance with the tax obligation, to the cancellation of the digital certificates linked to your RFC.

For example, according to article 82 of the Federal Tax Code , a fine of $15,860 to $31,740 MXN will be penalized for anyone who does not submit the returns in electronic media when they are obliged to do so, submits them after the deadline or does not comply. with the requirements of the tax authorities to present or comply with them outside the terms indicated therein.

In case of recurring faults, the SAT can determine the cancellation of your digital stamps, which would prevent you from invoicing both to sell and to collect, further complicating your situation.