Moving to Mexico, while still technically working within the US for an American company

[cvm1681]

Can you talk about how this works? Does the IRS need to know that I moved (temporarily or maybe even permanently) though I still work for my American company, and all of my work is within the US? Are the tax rates the same? What if I don't have a US address, should I set up a PO Box?

Thank you!

[AnnieK]

Good morning!

Thank you for your question.

As a United States citizen, you are subject to income tax on your worldwide income.  We do not address taxes imposed and assessed by other countries except to recognize that you would be entitled to Foreign Tax Credit or possibly the Foreign Tax Earned Income Exclusion depending upon your facts and circumstances.

Please see these links for more information.

https://www.irs.gov/individuals/international-taxpayers/figuring-the-foreign-earned-income-exclusion....

https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit

https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-about-internation....

Thank you for your question and have a great day!!!

[Loretta P]

Hello CVM1681,

A US citizen is required to pay taxes on all income regardless of where earned.  If you are taxed in the country you are living, you may qualify for a Foreign Tax credit on your US tax return.

Filing Taxes While Overseas

https://turbotax.intuit.com/tax-tips/general/filing-taxes-while-overseas/L8bP9GN5p

Claiming the Foreign Tax Credit with Form 1116

https://turbotax.intuit.com/tax-tips/military/filing-irs-form-1116-to-claim-the-foreign-tax-credit/L...

[JaredS_CPA]

Hello cvm1681,

Good question. If you remain a US citizen, you have to file a federal tax return no matter where you live in the world and everything remains the same in terms of tax rates. You may also be subject to state taxes depending on the laws of the last state you lived in. Also, it is not necessary for you to have a US address, but there is nothing that says you can't if you want one for whatever reason. Having said that, it is unclear from your question whether or not you will be working remotely for your American company while in Mexico or if you will be living in a border town and traveling to the US to work. The answer to that question may play a role in your state tax situation.

Another question you should be asking is whether or not Mexico will require you to pay taxes on your income while living in Mexico. If you do end up having to pay taxes to Mexico, you may be eligible for the Foreign Tax Credit on your federal return.