# Mexico Income Tax Question Regarding US Social Security



## Just Asking (Dec 13, 2020)

My husband gets $12,000 a month of Social Security. If we retire in Mexico, that $12000 will be the only income. 
Since he would have to file a US tax return, he would pay no taxes to the US government. 

However, I read that the Mexican government taxes all retirement income based on residency, regardless of source. 
I saw the rates--about 15% of the $12,000, no deductions. 

Does anyone hear pay Mexican income taxes on their Social Security? Need help here. .

Thank you!


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## Crawford (Jan 23, 2011)

$12,000 per MONTH??


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## Stevenjb (Dec 10, 2017)

If it is $1,200 / month USD - and it is your only income - it is unlikely you would file US Taxes (however do check with a tax expert to evaluate your circumstances)

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## surabi (Jan 1, 2017)

Where did you read such a thing?


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## Just Asking (Dec 13, 2020)

surabi said:


> Where did you read such a thing?


I forgot where, but it was in a Mexican "official" web site. In Mexico, income taxes for a resident are collected on ANY source of income, retirement income included. Where you received the income is unimportant. There is a tax treaty between the US and mexico, but of only involves wages and not retirement income.


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## Just Asking (Dec 13, 2020)

Crawford said:


> $12,000 per MONTH??


I forgot to add that the income includes annuities, rental income, and SS.


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## Stevenjb (Dec 10, 2017)

You may want to contact a lawyer in Mexico. My understanding is that you can't be double taxed on US income, only income from sources in Mexico. 

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## dvinton (Mar 8, 2019)

The UNITED STATES - MEXICO INCOME TAX CONVENTION (https://www.irs.gov/pub/irs-trty/mexico.pdf), Article 19, identifies who (only the US) can tax Social Security income. Whether you have a tax liability is a question between you and your accountant. I believe a $1200/mo income would be untaxed. You might not even have to file a return but consult a tax expert.


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## surabi (Jan 1, 2017)

Just Asking said:


> There is a tax treaty between the US and mexico, but of only involves wages and not retirement income.


Not as far as I'm aware. The tax treaty means that you can't be double taxed on anything. So lets say you are in a 20% tax bracket in the US, but have to pay 10% on your income in Mexico- your US taxes would then go down to 10%.

BTW, I know tons of expats who receive US Social Security and none of them pay Mexican income taxes on that.


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## AlanMexicali (Jun 1, 2011)

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BADO | Código Fiscal de la Federación | ARTÍCULO 9: A QUIENES SE CONSIDERAN RESIDENTES EN TERRITORIO NACIONAL







bado.mx





"Fiscal Code of the Federation GENERAL PROVISIONS FIRST"


Google Translation:

"ARTICLE 9: Those who are considered [tax] residents in national territory

The following are considered [tax] residents in national territory:

To the following individuals: Those who have established their home in Mexico. When the individuals in question also have a home in another country, they will be considered residents of Mexico, if their center of vital interests is located in the national territory. For these purposes, it will be considered that the center of vital interests is in national territory when, among other cases, they are located in any of the following cases: When more than 50% of the total income obtained by the natural person in the calendar year have a source of wealth in Mexico When in the country they have the main center of their professional activities Those of Mexican nationality who are State officials or workers, even when their center of vital interests is abroad.

Natural persons of Mexican nationality who prove their new tax residence in a country or territory where their income is subject to a preferential tax regime in the terms of the Income Tax Law will not lose their status as residents in Mexico. The provisions of this paragraph shall apply in the fiscal year in which the notice referred to in the last paragraph of this article is presented and during the following three fiscal years.

The provisions of the preceding paragraph shall not apply when the country in which the new tax residence is accredited has entered into a comprehensive tax information exchange agreement with Mexico.

The legal entities that have established in Mexico the main administration of the business or its headquarters of effective management.

Unless proven otherwise, it is presumed that natural persons of Mexican nationality are residents of the national territory.

Individuals or legal entities that cease to be residents in Mexico in accordance with this Code, must submit a notice to the tax authorities, no later than within the 15 days immediately prior to the one in which the change of tax residence occurs. (CFF: Art. 81)


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## Future Retiree (Feb 6, 2020)

I asked a closely related question almost a year ago, and it led to an interesting discussion. My question more about people working remotely for non-Mexican companies, etc., but the principle--paying Mexican income tax on non-Mexican income--should be the same.

As best I can tell, Mexican law does indeed specify that Mexican residents (which generally includes anyone who is physically in the country for more than 180/days per year) must pay Mexican income taxes on all income, whatever the source.

I haven't seen what I consider a really clear and authoritative explanation of why the tax treaty changes that. And note that Mexican income taxes are relatively high for higher earners (which, since wages are generally low in Mexico, would include a lot of expats who don't consider themselves high earners by any means back home).

Having said that, I am also well aware that many, many thousands of retirees (and others) live in Mexico from non-Mexican income, and I have never heard of any of them (with the possible exception of high earners like corporate executives working as expats in Mexico) paying Mexican taxes on non-Mexican income. Conversely, I have definitely read of cases where Mexican authorities came down hard on foreigners not paying taxes on income earned within Mexico (especially things like rental income, etc.)

I don't think I would worry about it if I were going to stay for a year or something. But if I were going to uproot completely and move to Mexico for the long haul (which actually is my plan someday), I would want to see something definitive. And I haven't yet.

It's a legitimate question, in any case.


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## RVGRINGO (May 16, 2007)

If you receive earned or investment income income from Mexican sources, you will owe income taxes in Mexico. If the income is received from abroad, from earnings or retirement, you will not be taxed by Mexico. So, your USA savings, investments and retirement will not be taxed by Mexico. Income your earn in Mexico will be taxed by Mexico.


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