Filing and Paying Taxes as an American expat in Mexico

3 min
Published on: 14-07-2022 Last modified on: 20-03-2024

One of the best places in the world to live as an American expat is Mexico. Mexico boasts a great quality of life, natural beauty, modern infrastructure, and safety. 

How many American expats live in Mexico?

Reports are that approximately one million Americans live in Mexico. While it’s hard to verify that number, it’s not hard to imagine that it’s true. Some are working, of course, for U.S., Mexican, or other foreign corporations. You’ll find them in cities like Mexico City, Queretaro, and Monterrey.

Paying taxes in the US while living abroad in Mexico?

Do you have to pay US expat taxes in Mexico? Expat tax rules state that if you’re a US citizen living abroad or a Green Card holder, you have to file a US tax return each year, even if you live and work in Mexico. The United States tax system is based on citizenship, not the place of residency.

Is there double taxation between the US and Mexico?

The United States – Mexico Tax Treaty covers double taxation with regard to income tax and capital gains tax, however, due to a Saving Clause, the benefits are limited for American expats in Mexico.

Real Estate and Property Tax in Mexico

When you buy property in Mexico, you will have to pay a 2% acquisition tax when you receive the deed. Buyers also pay 5 to 8% in closing costs. As a homeowner, you’ll pay a quarterly property tax that is roughly 0.1% of the property’s value. If you’re using a property for rental income, the money you earn will be taxed at a 25% rate.

FBAR (Foreign Bank Account Report)

If you had a total of at least US$10,000 in one or more Mexican bank and/or investment accounts at any time during the tax year, you also have to file FinCEN form 114, otherwise known as a Foreign Bank Account Report or FBAR.

The US and Mexican governments share taxpayer info, and Mexican banks pass on US account holders’ account info to the IRS, so it’s not worth not filing or omitting anything on your return. The IRS is very harsh in assessing penalties for failure to file FBARs or for incorrect FBAR filings.

Streamlined Procedure

If you’re a US citizen, green card holder, or US Mexican dual citizen, and you have been living in Mexico but you didn’t know you had to file a US tax return: there’s a program called the Streamlined Procedure that allows you to catch up on your filing without paying any IRS penalties. 

Americans Overseas helps American expats in Mexico

Need more information about US expat taxes in Mexico? American Overseas offers expat tax services for American expat Mexico, US persons living and working abroad, and green cardholders.

International taxation is quite a complex and specialized area. Americans Overseas offers a large independent network of US tax accountants and financial planners, specialized for Americans living abroad. Avoid double taxation and choose affordable advice.

Americans Overseas refers you free of any obligation and free of costs. Whether you’re employed or have a small business, we’ll make your life easier with a good, affordable tax advisor for your specific financial situation.

Contact us for more information


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Frequently asked questions

Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.

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