Mexico has a treaty, but the totalization agreement was signed in 2004 and never entered into force.
There is a US–Mexico income tax treaty, so Mexican income tax is creditable and double income tax is addressable. The totalization agreement is the trap: it was signed in 2004 and has never entered into force, so US self-employment tax at 15.3% applies with no relief despite the agreement's existence on paper.
Tax snapshot — Mexico
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Sources: IRS Publication 54; IRS Publication 901; US–Mexico income tax treaty (1992, as amended); SSA totalization agreement list (Mexico: signed 2004, not in force); Rev. Proc. 2025-32. Checked 1 September 2026.
What that means on your return
Signed is not in force. A totalization agreement between the two countries was signed in 2004 and has never been brought into effect, so it provides nothing. Anyone told otherwise — including by a Mexican adviser reading the signature date — is being given the wrong answer.
Mexican residency turns on where your centre of vital interests sits, not only on day-count, and Mexico taxes residents on worldwide income. Getting Mexican residency wrong changes both returns, not just one.
IMSS social security contributions are not creditable as an income tax on Form 1116. Employees usually find the ISR withheld is the creditable item and IMSS is not.
The retiree population matters here more than anywhere else on this site. US Social Security, pensions and IRA distributions are US-source income that Mexico may also tax as a resident — and the treaty articles on pensions decide which country gets what.
An Afore retirement account and Mexican investment funds raise reporting and PFIC questions in the same way Canadian funds do. Bring the statements to the call.
Mexican rates reach 35%, so on employment income the credit usually beats the exclusion. On pension and investment income the analysis is different and treaty-driven.
Questions I get about Mexico
Is there a US–Mexico totalization agreement?
One was signed in 2004 and has never entered into force, so in practice there is none. US self-employment tax at 15.3% applies to net self-employment income with no relief available.
I am retired in Mexico. Is my US Social Security taxed twice?
It is US-source income and Mexico may also tax you on worldwide income as a resident. Which country taxes what is decided by the treaty's pension and social security articles, and it is worth getting right before the first Mexican return is filed.
Are my IMSS contributions creditable on my US return?
No. IMSS contributions are social security, not income tax, so they do not go on Form 1116. Mexican ISR withheld is the creditable item.
Does living in Mexico part of the year make me a Mexican tax resident?
Possibly. Mexican residency turns on your centre of vital interests rather than on day-count alone, so a home and family in Mexico can establish residency even without a full year of presence.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Mexican bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from Mexico this year?
Twenty minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 17 years in practice, 12 of them as an Enrolled Agent.