I have been living in Mexico for several years with my husband and children. I have not filed US taxes in several years, nor have I been employed. Am I in trouble with the IRS?
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Insurance Lawyer
Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...
Jeffrey Johnson
Insurance Lawyer
Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...
Jeffrey Johnson
Updated July 2023
If you did not earn anything in the United States during the tax year, you were not required to file a tax return. Because you have not been employed (i.e., you earned no income) since you last filed a US tax return, you have no tax liability. If your husband is a Mexican citizen and living in Mexico, he owes no US tax unless he earned money in the United States.
In short, you are in no trouble and there is nothing you need to do.
Under US tax law, US citizens and aliens residing in the United States must file and pay taxes. This does include US citizens living abroad. US citizens working in Mexico are still responsible for filing a tax return. Non-US citizens should be paying taxes to the government of the country in which they are residing.
Regarding how much income is required to file taxes, while anyone earning taxable income can file a return, you are not required to file unless you earn more than roughly $9,000. Taxable Income is considered any payments or services received that are not an even trade. For example, if you are babysitting children during the day in Mexico for local families and are being paid, you are receiving income. Additionally, anyone performing free services for you is giving you a form of income. So, if someone comes to clean your house for free, that is a form of income.
If you have any questions about sources of income or when to file a United States tax return, contact a tax professional or tax attorney. If you are at all in doubt as to whether you need to file taxes, remember that it is always better to file and report no income then to forget to file when you have actual income.
Case Studies: Understanding US Tax Obligations for US Citizens Living Abroad
Case Study 1: Obtaining Health Insurance Coverage in Mexico
Sarah, a US citizen living in Mexico, is concerned about her health insurance coverage. She wants to know if her existing US health insurance policy will cover her medical expenses in Mexico. She contacts her insurance provider to inquire about the coverage options available to her in her current country of residence.
Case Study 2: Auto Insurance Considerations for Expatriates in Mexico
David, a US citizen who recently moved to Mexico, wants to ensure that his vehicle is adequately insured. He wonders whether his US auto insurance policy will provide coverage while driving in Mexico or if he needs to purchase additional insurance. David consults with his insurance agent to understand the requirements and options for auto insurance in Mexico.
Case Study 3: Homeowners Insurance for US Citizens With Property in Mexico
Jennifer, a US citizen who owns a vacation home in Mexico, wants to protect her property from potential risks and damages. She is uncertain about the insurance coverage provided by her US homeowners insurance policy for her property in Mexico. Jennifer seeks guidance from her insurance company to determine the best course of action and whether she needs to obtain a separate insurance policy for her Mexican property.
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