How does the Foreign Earned Income Exclusion work if I live in Mexico?

The Foreign Earned Income Exclusion only applies to earned income. Therefore, if you live in Mexico and earn wages or have your own business there, you can exclude up to $101,300 for 2016 from US income taxes. This exclusion does not apply to US self-employment taxes (Social Security and Medicare for the self employed). 
 
You must live in Mexico as your primary residence for a full calendar year a to claim this exclusion or out of any 365 day fiscal year, you must be...

The Foreign Earned Income Exclusion only applies to earned income. Therefore, if you live in Mexico and earn wages or have your own business there, you can exclude up to $101,300 for 2016 from US income taxes. This exclusion does not apply to US self-employment taxes (Social Security and Medicare for the self employed). 
 
You must live in Mexico as your primary residence for a full calendar year a to claim this exclusion or out of any 365 day fiscal year, you must be outside of the US at least 330 days.  The IRS does not get lists from Homeland security of your trips to and from the US. The foreign earned income exclusion rules are complex and you should read publication to make certain you comply with all of the requirements.

 

(The terrace of Zocalo, a restaurant in the historical center with views of the  Metropolitan Cathedral in Mexico City, Mexico, pictured.)