# Mexican Income Taxes



## cgsmith

Question: Moving from USA and retiring in Mexico via a FM2, recieving approx. $70K per year in pensions fom USA, will be renting in Mexico, what amount in income taxes will I have to pay annaually to Mexico? Thanks in advance for all responses.


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## sparks

Nothing unless you are working in Mexico


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## cgsmith

Thanks Sparks....


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## conklinwh

Only tax we pay in Mexico is what is withheld on interest from Mexican bank account. We then declare total interest income on US return and take foreign tax credit.
Unfortunately the US is one of two countries in the world that taxes total worldwide income even if have established residency abroad.


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## tftimm

What taxes would I pay in Mexico if I was working in Mexico, but paid in US dollars to my US bank account.

I hear there are tax advantages, such that you don't pay US income tax on income up to $75,000/year, although I believe you pay Mexican income taxes.

Can someone help me understand how that works so I understand. Let's say I made $96,000/year in US dollars (8K a month, just a round number), the way I understand it is that I would pay US income tax on $21K and I would pay some sort of income tax in Mexico...but how much?

Do US companies sometimes cover the Mexico income tax for you? How is that handled, is it paid once a year, is it automatically taken out of your check like the US? Is it combined with the US income tax for withdrawals?

Also, are you responsible for Medicare, Medicade, etc? Is the FICA the only tax you are excempt from paying up to $75,000?

Hopefully I have asked the question in a clear way. So what would my paychecks look like if I made $8,000/mos?


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## TundraGreen

conklinwh said:


> Only tax we pay in Mexico is what is withheld on interest from Mexican bank account. We then declare total interest income on US return and take foreign tax credit.
> Unfortunately the US is one of two countries in the world that taxes total worldwide income even if have established residency abroad.


I have to confess that I am confused by this thread. Prior to reading the original post in this thread I assumed that income (earned and interest/dividend) from the US was not subject to Mexican taxes. However, that post prompted me to google the topic. And every site I have found says that Mexico taxes worldwide income just as the US does. At least one site implied that the law may not be enforced very effectively.


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## johnmex

TundraGreen said:


> I have to confess that I am confused by this thread. Prior to reading the original post in this thread I assumed that income (earned and interest/dividend) from the US was not subject to Mexican taxes. However, that post prompted me to google the topic. And every site I have found says that Mexico taxes worldwide income just as the US does. At least one site implied that the law may not be enforced very effectively.


I'm just as confused. 

Why would I have to report my earnings in Mexico (my only income) to the US government. I recieve no services from the US government, why the heck would I have to report and/or pay US taxes?


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## TundraGreen

johnmex said:


> I'm just as confused.
> 
> Why would I have to report my earnings in Mexico (my only income) to the US government. I recieve no services from the US government, why the heck would I have to report and/or pay US taxes?


Unless you make more than about $91,500 usd in Mexico, you won't have to pay any taxes. But if you are a US citizen you are required to report any income you make anywhere in the world. There is a foreign income exclusion that allows us people living outside the US to avoid taxes on the first $91,500 of foreign income. But if you live in the US or make more than the limit you will owe taxes on foreign income. The exclusion is only for earned income. Dividend and interest income is taxable no matter where it is earned.The US apparently is getting more aggressive about enforcing this law also. It now requires foreign banks to report interest and dividend income for any US citizen investors. My daughter lives in Germany and most German investment firms now refuse to take her money because they don't want to deal with US tax law.

Disclaimer: I am neither an attorney nor a CPA. These statements are just my opinion/impression of the law. Caveat Emptor.


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## johnmex

Well that is screwy. 

I get, nor claim, any services from a federal government in a country I have not lived in for the past 18 years and they can tax my dividends and/or interest earnings?

Not me, sorry sir, I am NOT gonna pay. (Nor file)


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## MCL

johnmex said:


> Why would I have to report my earnings in Mexico (my only income) to the US government. I recieve no services from the US government, why the heck would I have to report and/or pay US taxes?


We are US citizens. The new US Passport even makes that clear on page 28 (next to last page.) Así es, ní modo.


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## mexicantaxquestion

*mexican tax*

I work in mexico but am paid through a US company. do i need to file a tax return in mexico? What is the form called?

thanks


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## RVGRINGO

You really should consult a tax professional.


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