Tax Question - Moving To Mexico From U.S.?

Question

I'm a U.S. citizen that's self employed working online and getting paid from american companies to my paypal account.

I'm thinking about moving to mexico, since I work online I'm not sure how the tax situation is going to work out.

Do I still have to pay taxes in U.S. even if I move to mexico?

Do I have to pay some type of self employment tax in mexico?

or would I get payed as normal to my paypal account and I simply don't pay any taxes?

(any advice is appreciated)

Answer 1

US citizens and residents are subject to US tax on their world-wide income, regardless of where the income is earned or where they live.

You will be required to file US tax returns and pay any US taxes, including self-employment taxes on your income. You may opt to exclude up to $82,400 in foreign earned income from US income tax OR take a credit for the foreign income taxes paid, but not both.

You must pay the self-employment (Social Security) taxex on your foreign earned income even if you elect to exclude it from US income tax. Since there is no totalization agreement with Mexico you very possibly will have to pay any Mexican Social Security taxes, if any.

As you will be living in Mexico you will be subject to Mexican tax laws. Consult with a Mexican tax expert for details on what your tax liability would be.

The tax rules for living and working outside the US are complex. Get a copy of IRS Pub 54 to get started. You may well wish to consult with a US tax pro who specializes in US ex-pats living overseas.

Answer 2

US citizens are taxed on their worldwide income. You would still be required to file a tax return but would get credit for payments of Mexican income tax.