Hi!

I'm a mexican citizen. I was wondering whether I need to pay US taxes for a sale of land in Mexico while legally working in US under L1B non-immigrant status. The money of the sale was never deposited in a US bank account, but in a mexican account on my name.

I'll appreciate a lot your help!
Thanks

If you have completed SPT on L1B, you must file resident tax return. On the resident tax return, you must report your worldwide income.
If you paid taxes in the foreign country, you will claim credit for taxes paid in the foreign country by filing Form 1116 or can file form 2555 Foreign Earned Income Exclusion.. Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income (http://taxipay.blogspot.com/2008/03/us-citizen-or-resident-with-foreign.html)

I agree with MukatA except that the foreign earned income exclusion will not apply to the sale as the income is not earned income. The gain is likely capital gain and subject to U.S. federal tax at a 15% rate. If you have a foreign bank account, don't forget to complete Form TD F 90-22.1.

Agree that the Foreign Eanred Income Exclusion (Form 2555) would not apply, but the Foreign Tax Credit (Form 1116) probably DOES apply, assuming that Mexico will also tax the capital gain from the sale of the property.