US-Mexico Cross-Border Tax Guide

A working guide to the US filing rules that follow you into Mexico, written by a bilingual Houston firm that handles the US side directly and coordinates Mexican representation through our partnership with Maya Contadores SC.

Do You Still File US Taxes If You Live in Mexico?

Yes. The United States taxes its citizens and permanent residents on worldwide income regardless of where they live, so moving to Mexico changes where you file from, not whether you file. Mexican residency adds a second set of obligations on top of the US ones rather than replacing them.

You likely have filing obligations in both countries if any of the following describes you:

• You are a US citizen or green card holder living in Mexico for part or all of the year
• You are a Mexican national who has become a US tax resident and still holds accounts, property, or business interests in Mexico
• You earn income from Mexican sources while remaining a US tax resident
• You run a business, consultancy, or freelance practice with clients on both sides of the border

Mexico determines residency differently than the United States does. Under Article 9 of the Código Fiscal de la Federación, the starting test is whether you have a permanent home, or casa habitación, in Mexico. If you keep a home in both countries, Mexico looks to your center of vital interests, which it defines as more than half of your annual income coming from Mexican sources or your principal professional activity being based in Mexico. There is no simple 183-day rule to fall back on here, which is why day-counting advice written for other destinations misleads people.

How the IRS Treats a Fideicomiso After Revenue Ruling 2013-14

Mexican law bars foreign nationals from holding direct title to residential property within roughly 50 kilometers of the coastline or 100 kilometers of a land border. Buyers inside that restricted zone hold the property through a fideicomiso, a bank trust arrangement in which a Mexican bank holds legal title while the buyer keeps every practical right of ownership.

That structure created years of anxiety, because a fideicomiso treated as a foreign trust would pull the owner into Form 3520 and Form 3520-A reporting with steep penalties for missing either one. Revenue Ruling 2013-14 settled the general question. The IRS held that a standard Mexican land trust is not a trust under Treasury Regulation section 301.7701-4(a), so the owner is treated as holding the property directly and no foreign trust reporting is triggered.

Your fideicomiso fits the standard pattern the ruling describes when all of the following are true:

• The bank holds legal title to the property and to no other assets
• The bank's only duties are to hold title and transfer it at your direction
• You retain the right to manage, occupy, rent, and sell the property
• You collect any rental income directly
• You pay the property taxes and other liabilities on the property yourself

The analysis flips when the bank does more than that. If the agreement lets the bank hold additional assets, or permits or requires it to do anything beyond holding bare legal title, such as collecting rents or handling maintenance, the ruling stops applying and the arrangement has to be classified under the general entity rules instead. Form 3520 and Form 3520-A can come back into play at that point. The document that decides this is your trust agreement, not the general rule, which is why we read the actual fideicomiso before telling a client where they stand.

The Totalization Gap Between IMSS and US Self-Employment Tax

Most major destinations for Americans abroad have a social security totalization agreement with the United States, which keeps a worker from paying into two systems on the same earnings. Mexico does not have one in force. The Social Security Administration published an agreement signed at Guadalajara on June 29, 2004, but it still has to go to the US Congress and the Mexican Senate for review before it can enter into force, and that step has not happened.

The consequence lands hardest on self-employed filers. A self-employed US person working in Mexico can owe the full US self-employment tax rate of 15.3% on net earnings, made up of 12.4% for Social Security and 2.9% for Medicare, and owe IMSS contributions in Mexico on the same work. Neither country credits the other, and no treaty provision closes the gap.

How much exposure you carry depends on how you are paid:



• Self-employed filers, including consultants, freelancers, and single-member LLC owners, carry the largest exposure because they pay both halves of the US tax themselves
• Employees of a US employer generally have FICA withheld on US-source wages, while Mexican-source wages from a Mexican employer are covered by IMSS on that side, so the overlap narrows
• Filers drawing income from both arrangements need the two systems mapped side by side before estimated payments are set

Planning options do exist, and they turn on entity structure, where services are performed, and how income is sourced. None of them come from a totalization credit, because there is none to claim. Getting the structure right before the year begins is usually the only lever that moves the number.

How RFC Registration Changes Your US Filing Picture

Getting an RFC, the Registro Federal de Contribuyentes number issued by Mexico's tax authority, is usually treated as a relocation errand. It is closer to opening a second compliance track that runs alongside your US return for as long as you hold the number.

Step 1: Register with the SAT

You obtain your RFC through Mexico's Servicio de Administración Tributaria, typically with a CURP, proof of address, and valid immigration documentation, and you select a tax regime at the same time.

Step 2: Take on Mexican reporting duties

Depending on the regime you choose, the RFC brings periodic filings, electronic invoicing through CFDI, and an annual ISR return.

Step 3: Keep filing in the United States

Nothing about the RFC reduces or replaces your Form 1040 obligation. US citizens and green card holders continue reporting worldwide income, including the Mexican income now flowing through the RFC.

Step 4: Coordinate the credits and exclusions

Mexican tax paid on Mexican-source income is what makes the foreign tax credit or the foreign earned income exclusion worth claiming, and the figures on your Mexican return are the inputs. Filing the two returns in isolation is how people end up paying twice on the same income.

The connection most relocation guides skip is that your RFC creates a paper trail the IRS will eventually see, both through FATCA reporting by Mexican financial institutions and through the income you are already required to disclose. Registering is the right move. Treating it as the end of the process is the mistake.

Reporting Your IMSS, SAR, and Afore Accounts

If you have worked formally in Mexico, you have a contribution record with IMSS and a retirement account administered by an Afore, with the balance invested through Siefore funds. From a US perspective these are foreign financial accounts, and they carry reporting duties clients rarely expect from something they think of simply as a pension.

IRS FBAR guidance names Mexican individual retirement accounts and Afore accounts specifically as foreign financial accounts reportable on FinCEN Form 114. The balance counts toward the aggregate threshold alongside your Mexican bank and brokerage accounts. Depending on your total foreign asset values, the same accounts may also belong on Form 8938.

The harder question is whether the Siefore funds inside the account are passive foreign investment companies. Foreign pooled investment funds frequently meet the PFIC definition, which can pull Form 8621 into the picture, and the treatment of Mexico's mandatory retirement funds is not fully settled. Practitioner groups have asked the IRS to exempt them, and no exemption has been issued. We work the analysis account by account rather than assuming either answer, and our page on FATCA, FBAR, and PFIC compliance walks through the three regimes in detail.

Coordinating the April 30 ISR Deadline With Your US Return

Two filing calendars run at once, and they do not line up.

• Mexican individuals file the annual ISR return, the declaración anual, by April 30 for the prior calendar year, and when April 30 falls on a weekend or holiday the deadline moves to the next business day under Article 12 of the Código Fiscal de la Federación
• Mexican companies file their annual return by March 31
• US individual returns are due in mid-April, with an extension available to October 15
• US citizens and residents whose tax home is abroad receive an automatic two-month extension to mid-June, though interest still runs on tax owed from the original due date
• FinCEN Form 114 is due April 15 with an automatic extension to October 15, and no request is required

Sequencing matters more than the individual dates. Because the foreign tax credit depends on Mexican tax actually paid or accrued, filing the US return before the Mexican position is settled often means amending later. For most cross-border clients we work the Mexican numbers first, then use the June or October US window to file once with the credit calculated correctly.

Cross-Border Questions We Answer Most Often

Representation on the Mexico Side

Cross-border work has a hard practical limit. Filings, correspondence, and representation inside Mexico have to be handled by a firm licensed and present there, and MABE International Advisors is a single-office Houston firm without operations in Mexico.

So we split the work along the border. We handle the US side directly: Form 1040 and Form 1040-NR preparation, FBAR and Form 8938 filings, PFIC analysis, foreign tax credit and exclusion planning, entity structuring, and IRS correspondence. Execution and representation inside Mexico runs through our partnership with Maya Contadores SC, a separate and independent Mexican accounting firm.

That arrangement means you are not managing two unrelated advisors who have never spoken to each other. Your Mexican ISR position and your US return get built from the same set of facts, in English or Spanish, on one timeline. For clients with holdings beyond Mexico, our expat and foreign investment tax consulting covers the same coordination internationally.

Start With a Conversation About Your Situation

Every cross-border case turns on specifics: what your fideicomiso agreement actually says, which Mexican regime your RFC sits in, whether your Afore holds Siefore funds, and how your income is sourced. We would rather read those documents than guess at them. Bring what you have and we will tell you where you stand in plain language.