Mexico Cross-Border Tax
Mexico-related cross-border situations come up across all four of our service areas. This page gives a brief overview of each. The U.S. and Mexico have a comprehensive income tax treaty and a social security totalization agreement, both of which affect how cross-border income, accounts, and entities are handled.
U.S. Individuals with Mexican Ties
U.S. residents and dual citizens who own Mexican businesses or financial accounts have annual reporting obligations that apply regardless of where they live. Mexican entity structures like the SA de CV and S de RL de CV require specific U.S. forms depending on how they are classified.
- Form 5471 for ownership in Mexican corporations (SA de CV and similar)
- Form 8865 for interests in Mexican partnerships (S de RL de CV and similar)
- Form 8858 for foreign disregarded entities or branch operations
- FBAR and FATCA for Mexican bank and investment accounts
- AFORE pension account review and reporting
- Subpart F and GILTI analysis for controlled foreign corporations
- Pre-immigration restructuring for those planning to move to the U.S.
U.S. Expats Living in Mexico
Mexico is one of the most common destinations for American expats. The Foreign Earned Income Exclusion is often available, and whether it or foreign tax credits produce the better result depends on the local tax picture. Mexico’s generally lower tax burden means FEIE is often the right starting point.
- FEIE and housing exclusion analysis
- Foreign tax credit vs. FEIE comparison
- U.S.-Mexico treaty provisions for income sourcing and reduced withholding
- FBAR and FATCA for Mexican accounts
- Social security totalization for those with self-employment or employment income on both sides
- State residency and domicile issues
Mexican Investors and Businesses in the U.S.
Mexican nationals forming U.S. businesses or making U.S. investments need proper setup and ongoing compliance. The U.S.-Mexico treaty reduces withholding on certain U.S.-source income paid to Mexican residents, which is relevant for investment structures.
- U.S. LLC formation and structure analysis
- EIN and ITIN applications
- Form 5472 compliance for foreign-owned single-member LLCs
- Treaty reduced withholding on dividends, interest, and royalties
- U.S. tax return filing for inbound structures
- Back-office support for setup, renewals, and ongoing filings
U.S. Real Estate Owned by Mexican Investors
Mexican buyers of U.S. real estate — especially in border states, Florida, and other high-demand markets — are subject to FIRPTA withholdings on sale and require specific filings to handle rental income correctly.
- FIRPTA withholdings on sale and withholding certificate applications
- Net income election for rental property to avoid gross withholding on receipts
- Form 1040-NR, ITIN support, and state returns
- LLC formation, annual renewal, U.S. mailing address, and bank setup
- U.S. estate tax review — U.S. real property is a U.S.-situs asset
Who This Is For
This page fits Mexican-American dual citizens and U.S. residents with Mexican holdings, Americans living in Mexico, Mexican nationals investing or operating in the U.S., and Mexican buyers of U.S. real estate.