Jan 16, 2012   //   by admin   //   Living in Mexico, Mexico Living, Mexico Living Now, Uncategorized  //  No Comments
Tax Season - Living in Mexico

Time to Learn Tax Law


Moving outside of the United States and living in Mexico makes it easy to forget about that little yearly thing called Tax Season.  Regardless of where you live or plan to live, the deadline for filing taxes remains April 15th of the year following your earned income.  If you need to file an extension, make sure to do so before the deadline of April 15th.


An extension of time to file is NOT an extension of time to pay taxes owed.  If you are presently living in Mexico and wish to file an extension, you can electronically file a form 4868 (pdf).  At the

time of filing this form, if you know you owe taxes, you should make an attempt to also pay some part of or the total amount of taxes due on or before April 15, 2012 and the same every year following.

Living in Mexico Does Not Change Your Duty to File Taxes

Although you may be living in Mexico, your duty to report taxable income does not change.  If you are a U.S. citizen living in Mexico or hold dual citizenship with another country outside of the United States, you must make yourself aware of the U.S. Federal Income Tax laws that apply.

Living in Mexico on Social Security Income

First, let’s address social security income.  If  you are living in Mexico and social security retirement or disability is your sole income, you do not have to file an income tax statement.  You do  have to report social security income only if you have an additional income which you receive, including income from foreign investment accounts or employment that would exceed the standard deductions.  For a table of how to report social security income plus earned income, please refer to the tax table offered on the site for standard deductions.  When on the site, check for the Standard Deduction publication 551.

If you are living in Mexico and if you are receiving foreign earnings from foreign sources, including but not limited to overseas investments, you are subject to the same income tax filing as that which applies to any U.S. citizen or residents living in the United States.  If you fall into either category; citizen or resident alien, your worldwide income is subject to U.S. income tax regardless of your place of residence outside of the states.

Conversely, if you are living in Mexico, you may be able to take advantage of several income tax benefits, if applicable, meeting certain requirements while living abroad.  Form 1116 is used to figure out credits while living abroad.  Form 2555, Foreign Earned Income, is used to claim the respective benefits and must be attached to your income tax return.  For foreign earned income exclusion, use Form 2555-EZ.

Living in Mexico and Paying Foreign Income Tax

Now, be aware that if you are living in Mexico and you also pay foreign income tax, you may be able to take a tax credit through an itemized deduction as well as possibly reduce your foreign income  tax liability as a result of tax treaties or conventions held by the U.S. with some foreign countries.  For further clarity on this subject matter refer to Publications 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, 514, Foreign Tax Credit for Individuals, and 901, U.S. Tax Treaties, See How To Get Tax Help.

Remain diligent!

As a citizen of the United States and living in Mexico or working in another country, keep yourself informed of any income tax changes for your specific situation.

If your foreign earnings are paid to you in foreign currency, or the country in which you live imposes an income tax, you are still required to report these earnings to the United States.  Additionally, if you are working  in Mexico but self employed and your net earnings exceed $400 or more, these earnings must be included in “income earned” whether from a foreign country or from the United States, regardless of your age.

Tax Filing for U.S. Citizens holding Foreign Bank and Financial Accounts.

If you are living in Mexico and  have money in a Foreign Bank and / or Financial Accounts in Mexico, you will be required to fill out a form called the FBAR.   In this regard, a foreign country is defined as any geographical area outside of the United States, including the commonwealth of Puerto Rico, the commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands).

The deadline for filing an FBAR is June 30 of the year following an account holder meets the threshold of $10,000 U.S. in the foreign bank or financial account.

NOTE:  You CANNOT file an extension for an FBAR.  Even if you are granted an extension for your regular filing, this extension does not include the FBAR report.

Related articles

If you are living in Mexico, we hope you have found this information helpful for filing income tax.

Please feel free to write to us if you have any further income tax filing information you can share to help other expats regarding working or living in Mexico.








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