# Taxes on Retirement income in Mexico



## Txwidret (Oct 27, 2020)

If I expat to Mexico, will both my SS and pension be taxed? I don't plan on working in Mexico. 
Thanks


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## Moulard (Feb 3, 2017)

Typically treaties cover all three types of pensions 


Public Pension - ie paid from the public purse... Social Security is an example
Private Pension - ie paid from private funds (employer or personal)
Government Service Pension - ie. paid by the government (state, federal, municipal employee etc) for services as a employee 
But each is treated differently tax wise. 

Very broadly the most common pattern found in US treaties is that...

Public Pensions are typically only taxable by the country that pays it
Private Pensions are typically only taxable by the country you reside.
Government Pensions are typically taxed like private pensions but with carve outs depending on citizenship and residency at time of service and time of pension distribution
 I am not familiar with the details of the US-Mexico treaty... but a quick skim suggests it follows this pattern.

Assuming that your pensions is NOT a pension for being a prior public employee...

US Social Security would be taxable by the US
Your Private Pension would be taxable by both Mexico and the US (by virtue of the savings clause that allows the US to tax its citizens as if the treaty was not in effect)
To reduce double taxation that would result, the US typically allows you to claim a tax credit for foreign taxes paid to Mexico.

You will want to familiarise youself with the Mexico treaty and its amending protocols.






Mexico - Tax Treaty Documents | Internal Revenue Service


Mexico - Tax Treaty Documents




www.irs.gov


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