# Is my US income taxable in Mexico?



## xpro6000 (Jan 14, 2014)

If a US Citizen is working online and generates all his income like that will he get taxed on his income by Mexican law?


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## TundraGreen (Jul 15, 2010)

xpro6000 said:


> If a US Citizen is working online and generates all his income like that will he get taxed on his income by Mexican law?


Both Mexico and the US tax worldwide income. Mexico and the US have signed a treaty that recognizes taxes paid in the other country and allows deductions for them.

I am neither a tax attorney nor an accountant so take this information with a grain of salt. It is my undstanding that if you are paying US taxes on income from US sources, it is likely that you would not owe additional Mexican taxes. Consequently, many do not file Mexican returns for US income.


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## xpro6000 (Jan 14, 2014)

TundraGreen said:


> Both Mexico and the US tax worldwide income. Mexico and the US have signed a treaty that recognizes taxes paid in the other country and allows deductions for them.
> 
> I am neither a tax attorney nor an accountant so take this information with a grain of salt. It is my undstanding that if you are paying US taxes on income from US sources, it is likely that you would not owe additional Mexican taxes. Consequently, many do not file Mexican returns for US income.


yes but with US you are exempt for the first (about 100 000) as long as you spend less than 35 days in the US.


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## charlie131120 (Nov 30, 2013)

xpro6000 said:


> yes but with US you are exempt for the first (about 100 000) as long as you spend less than 35 days in the US.


I also am not an accountant or tax lawyer - but there is no free lunch. If you take the US Foreign Earned Income Exemption it is implied that you are paying Mexico for those earnings. And - I believe Mexico will give you a higher tax bill. And if you exceed the exemption amount - you have to pay the US on the balance and (I don't know how to word it) - you jump into the tax tables at the exclusion limit (you are not starting at zero). But this is just what I understand - I could be wrong.

What I don't understand is - say the exemption limit is 100K and let's say you make 150K. You have to pay the US on the 50K and - you have to pay Mexico on 150K - since by taking the US exemption you are asserting that you are subject to Mexican taxation ?


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## TundraGreen (Jul 15, 2010)

xpro6000 said:


> yes but with US you are exempt for the first (about 100 000) as long as you spend less than 35 days in the US.


Yes, but to be clear, that exclusion only applies to income from non-US sources. US income is fully taxable in the US even if you are out of the country all year.


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## TundraGreen (Jul 15, 2010)

charlie131120 said:


> I also am not an accountant or tax lawyer - but there is no free lunch. If you take the US Foreign Earned Income Exemption it is implied that you are paying Mexico for those earnings. And - I believe Mexico will give you a higher tax bill. And if you exceed the exemption amount - you have to pay the US on the balance and (I don't know how to word it) - you jump into the tax tables at the exclusion limit (you are not starting at zero). But this is just what I understand - I could be wrong.
> 
> What I don't understand is - say the exemption limit is 100K and let's say you make 150K. You have to pay the US on the 50K and - you have to pay Mexico on 150K - since by taking the US exemption you are asserting that you are subject to Mexican taxation ?


I believe the Foreign Earned Income Exclusion only applies to income from non-US sources. It is not an option for US income.


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## xpro6000 (Jan 14, 2014)

TundraGreen said:


> Yes, but to be clear, that exclusion only applies to income from non-US sources. US income is fully taxable in the US even if you are out of the country all year.


The exclusion applies to US income if you meet the residency test. and if you live in a country with no income tax, you will not pay anything if you make less than about 100 000. By the looks of it Mexico does have an income tax, so I can not live in it.


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## Isla Verde (Oct 19, 2011)

xpro6000 said:


> The exclusion applies to US income if you meet the residency test. and if you live in a country with no income tax, you will not pay anything if you make less than about 100 000. By the looks of it Mexico does have an income tax, so I can not live in it.


Yes, indeed, Mexico does levy a tax on income. Since I work here as a free-lance English teacher, every month I have to file and pay a tax of around 25% on my very modest earnings.


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## charlie131120 (Nov 30, 2013)

TundraGreen said:


> I believe the Foreign Earned Income Exclusion only applies to income from non-US sources. It is not an option for US income.


I also believe that is correct - and if a programmer (say) works in Mexico and is paid into a US bank - and does NOT have an RFC - I think he could take the exclusion if he was here for 330 days in the year. If he had an RFC I "think" Mexico would be looking for the taxes. Once again - I'm far from an expert.

If you google "mexico's income tax higher than us" right near the top of the results you will see some interesting info. And it also pointed out that you are still required to pay social security tax on all your income. Once again - take it with a grain of salt.


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## Chelem Bound (Jan 27, 2014)

Oh so very confusing...heck I am a Social Worker cuz I cannot do/comprehend math....


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