Will the US or Canada make me pay income tax on money I earn in Mexico?

The US IRS requires you to file a tax return and report your worldwide income and file a tax return so long as you earn over a certain minimum amount. If you pay taxes on that income earned outside the USA, you can claim a foreign tax credit for any foreign income taxes paid on those amount which will offset all or part of your US tax on that amount.

 

(US tax return form, pictured.)

The US IRS requires you to file a tax return and report your worldwide income and file a tax return so long as you earn over a certain minimum amount. If you pay taxes on that income earned outside the USA, you can claim a foreign tax credit for any foreign income taxes paid on those amount which will offset all or part of your US tax on that amount.

 

(US tax return form, pictured.)

If you are a US citizen or green card holder, you are subject to US tax on all of your income, even if you live full-time outside the US. However, there are several US tax incentives and special structures that can reduce your US tax while living abroad, potentially to $0.

 

For example, you can earn up to about $100,000 each year from working without paying any US tax. If you make more than that and pay tax in Mexico, you can reduce your US tax bill by the amount of...

If you are a US citizen or green card holder, you are subject to US tax on all of your income, even if you live full-time outside the US. However, there are several US tax incentives and special structures that can reduce your US tax while living abroad, potentially to $0.

 

For example, you can earn up to about $100,000 each year from working without paying any US tax. If you make more than that and pay tax in Mexico, you can reduce your US tax bill by the amount of Mexican tax you paid. Then, things get more complicated if you run your own business--you can use specialized structures to further reduce or defer payment of US tax.

 

(Breakfast on a Mexican patio, pictured.)

Canada does not make you pay income tax on money you earned in Mexico. We became non-residents when we left Canada. You pretty much cut all ties, such as memberships and credit cards. You may have a bank account in Canada but not properties and cars. Once you've done that, you do not have to pay or file for any income tax in Canada for money that you make in Mexico.

 

(Happy Canada Day celebrated in Ajijic, Mexico, pictured.)

Canada does not make you pay income tax on money you earned in Mexico. We became non-residents when we left Canada. You pretty much cut all ties, such as memberships and credit cards. You may have a bank account in Canada but not properties and cars. Once you've done that, you do not have to pay or file for any income tax in Canada for money that you make in Mexico.

 

(Happy Canada Day celebrated in Ajijic, Mexico, pictured.)