More Americans are moving to Mexico while keeping a U.S. company, U.S. clients or a U.S. paycheck. The visa and the apartment usually get careful planning. The taxes often don’t, and that is where people get surprised a year or two later.
Two countries, one income
The United States taxes its citizens on worldwide income wherever they live. Mexico generally taxes its tax residents on worldwide income too. Once you live in Mexico, both countries may have a claim on the same dollar. The U.S.–Mexico tax treaty and foreign tax credits are designed to reduce double taxation, but they only work when both sides are reported and coordinated.
Are you a Mexican tax resident?
Under Article 9 of Mexico’s Federal Fiscal Code, a person who has established their home in Mexico is generally a Mexican tax resident. If you also keep a home elsewhere, you can still be a resident if your center of vital interests is in Mexico, for example when the main center of your professional activities is there.
Your temporary or permanent residency card is useful documentation, but immigration status alone doesn’t decide tax residency. Many people become Mexican tax residents without realizing it, simply by moving into a home in Mexico and working from it.
What Mexican filings can look like
- Registration with SAT: an RFC, a SAT password, an e.firma and a Buzón Tributario, set up for the obligations that actually apply to you.
- Monthly payments: income with no Mexican withholding, such as a salary paid from abroad, can require monthly provisional income tax payments, generally due around the 17th of the following month.
- An annual return: generally filed in April of the following year, reconciling the year and claiming credit for foreign taxes where allowed.
Registering under the wrong regime can create obligations that don’t fit your situation, so decide what you need to file before you register.
What continues in the United States
You keep filing your U.S. returns. Depending on the tests you meet, the foreign earned income exclusion (up to $132,900 for 2026) or the foreign tax credit may reduce U.S. tax, but you can’t use both on the same income. Foreign accounts may also trigger FBAR and Form 8938 reporting.
A special note for S corporation owners
Mexico has its own rules for foreign entities that are transparent for tax purposes, and they can require reporting of company profits before you take the cash out. On the U.S. side, an owner who works in the business generally needs reasonable compensation through real payroll before taking distributions. A bank transfer labeled “salary” is not payroll. Where you physically do the work also matters for where the income is sourced, so keep a simple log of your workdays in each country.
Assess
Confirm your residency facts and which Mexican filings apply.
Register
Set up SAT only for the obligations that fit your situation.
Coordinate
File monthly and annually, matched to your U.S. returns.
Free guide: Moving to Mexico With a U.S. Business
Our cross-border tax checklist covers tax residency, SAT registration, monthly Mexican filings, what continues in the U.S. and the most common mistakes.
Living in Mexico with U.S. income?
Mac Neal LLC coordinates U.S. and Mexican taxes for people living in Mexico, with Mexican filings prepared together with our Mexico-based contador. Cross-border assessments start at $450.
Sources and educational notice
Sources: Código Fiscal de la Federación, Article 9, SAT: Inscripción en el RFC, IRS: Mexico tax treaty documents, IRS Publication 54, IRS: S corporation compensation. This article is general educational content based on rules in effect as of its publication date. Your filing obligations depend on your facts; Mac Neal LLC can review your situation on a free call.
Founder of Mac Neal LLC. More than fifteen years across accounting, financial services and regulation, including the CFTC and NFA. About Malcolm →