Moving to Mexico From the US: Tax Guide for Americans

2026-07-09

Last reviewed: July 9, 2026. This article reflects current IRS rules and EA exam requirements as of this date.

Moving to Mexico means your tax life gets more complicated, not less. The US taxes citizens on worldwide income regardless of where they live. Mexico taxes residents on their income. The overlap creates dual filing obligations that require coordination.

This guide covers the initial tax steps — what to do when you arrive, before you file your first Mexico return.

Before You Move

Get your US filing in order. If you have unfiled US returns, address them before you leave. The Streamlined Filing Compliance Procedures let you catch up without penalties, but it's easier to complete from the US with access to your records. Once you're abroad, gathering documents becomes harder.

Understand the Foreign Earned Income Exclusion. For the 2025 tax year, you can exclude up to $130,000 of foreign-earned income from US tax. You qualify under the bona fide residence test (you're a bona fide resident of Mexico for an entire tax year) or the physical presence test (330 days outside the US in a 12-month period).

Understand the Foreign Tax Credit alternative. The FTC on Form 1116 credits Mexico taxes against your US tax liability. In some countries with high tax rates, the FTC eliminates US tax entirely and generates excess credits for carryforward. In others with low rates, the FEIE is the better election.

When You Arrive

Obtain your RFC (Registro Federal de Contribuyentes) — the Mexican tax ID issued by the SAT.
Understand the Mexican tax year: January 1 to December 31 (same as the US).
If buying property in the restricted zone (within 50km of coast or 100km of border), set up a fideicomiso (bank trust). Understand the US reporting obligation — the fideicomiso is a foreign trust requiring Forms 3520 and 3520-A.
Determine your Mexican residency status — you become a tax resident at 183 days or when your principal home is in Mexico.
Understand the US-Mexico treaty's tie-breaker if you maintain ties to both countries — the center of vital interests test determines which country taxes worldwide income.

Your US Filing Obligations

You'll continue filing Form 1040 with the IRS every year. Your filing deadline is April 15 with an automatic two-month extension to June 15 for Americans living abroad. An additional extension to October 15 is available on request.

You'll file FBAR (FinCEN Form 114) if your foreign account balances exceed $10,000 in aggregate. This is separate from your tax return and filed electronically through the BSA E-Filing System by April 15 with an automatic extension to October 15.

You may need to file Form 8938 (FATCA reporting) if your foreign financial assets exceed higher thresholds ($200,000 for single filers living abroad, $400,000 for joint filers).

The EA You'll Need

A domestic preparer who's never handled an expat return will miss things. Find an EA or CPA who files Mexico expat returns regularly. Ask them: How many Mexico returns did you file last year? Are you familiar with the US-Mexico tax treaty? What's your approach to the FEIE vs FTC election for someone in my situation?

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