Do I have to pay taxes to both Mexico and U.S. as a dual citizen?

15 Yes, as a U.S. citizen, you are required to file U.S. tax returns regardless of where you live or work in the world. The U.S. is one of the few countries that taxes its citizens on worldwide income, not just income earned within its borders. The good news is that there are provisions to prevent double taxation. The Foreign Earned Income Exclusion (FEIE) allows you to exclude up to $120,000 (for 2024 tax year) of foreign earned income from U.S. taxation. Based on your stated income of around $10,000, you would likely owe zero U.S. taxes after applying this exclusion. You may also qualify for the Foreign Tax Credit, which gives you a credit for taxes paid to Mexico. You would need to file Form 1116 along with your tax return to claim this credit.

9 I was in a similar situation when I worked in Spain for 3 years. The paperwork was driving me crazy until I found this tool called taxr.ai (https://taxr.ai) that specializes in helping expats and dual citizens with their tax situations. It guided me through all the foreign income forms and helped me understand which exclusions and credits applied to my situation. The Foreign Earned Income Exclusion saved me from double taxation, but you still have to report everything correctly. Their system flagged a few things I would have completely missed on my own, especially around FBAR requirements for foreign bank accounts (which is separate from tax filing but mandatory if you have over $10k in foreign accounts).

12 Just wanted to follow up - I finally tried taxr.ai last month for my dual US/Mexican citizenship situation. It was actually super helpful! It guided me through all the FEIE forms and explained that I needed to file FBAR forms for my Mexican accounts. Turns out I was overthinking it - with my income level, I didn't owe any US taxes after the exclusions. The IRS accepted my returns with no issues, and it even helped me do a backdated return for last year. Huge relief to have this sorted out properly!

5 I dealt with the same issue but couldn't get the IRS to answer ANY of my questions about foreign income. I eventually used Claimyr (https://claimyr.com) to get through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically call the IRS for you and navigate all the phone tree stuff, then call you when an agent is on the line. I spoke with an IRS representative who specialized in international tax issues and got clear guidance on my specific situation with Mexican income. The agent confirmed I needed to file but wouldn't owe additional tax due to the exclusions, and also helped me understand the process for catching up on missed filings without penalties.

18 I'm eating my words right now. After posting that skeptical comment, I decided to try Claimyr out of desperation - and it actually worked! Got connected to an IRS agent within 2 hours (while I just went about my day). The agent walked me through everything about my dual Mexico/US situation. They confirmed I needed to file FBAR forms for my Mexican accounts and helped me understand the Streamlined Filing Procedures for catching up on past returns without penalties. Seriously wish I'd known about this service years ago instead of stressing about this stuff.

11 A few important things nobody mentioned yet: 1. You'll need to convert your Mexican income to USD using the annual average exchange rate when filing your US taxes. 2. Mexico and the US have a tax treaty which helps prevent double taxation, but you still need to file in both countries. 3. The filing deadline for US citizens living abroad is automatically extended to June 15 (instead of April 15), and you can request an additional extension to October 15 if needed.

16 Something else to think about - if you have Mexican bank accounts with a combined value of over $10,000 USD at any point during the year, you need to file an FBAR (Foreign Bank Account Report). This is separate from your tax return and has hefty penalties if you don't comply. The deadline is April 15 with an automatic extension to October 15.

Don't panic! Your situation is actually pretty common and manageable. As a U.S. citizen, you do need to file U.S. tax returns annually regardless of where you live, but with your income level (~$10,000 USD), you likely won't owe any U.S. taxes after applying the Foreign Earned Income Exclusion. Here's what you need to do: 1. File Form 1040 and Form 2555 for the FEIE 2. Consider the Streamlined Filing Compliance Procedures for catching up on last year - this program is designed for situations exactly like yours 3. Check if you need to file FBAR for your Mexican bank accounts (if combined balance exceeded $10,000 USD at any point) The key thing to remember is that the U.S. has provisions specifically to prevent double taxation. You're already paying taxes in Mexico, so the exclusions and credits should cover you. I'd recommend getting help from a tax professional who specializes in expat situations, or using one of the online tools mentioned above to make sure you're filing everything correctly. You're not the first dual citizen to discover this requirement late - the IRS has programs specifically designed to help people in your situation get compliant without major penalties.

As someone who went through this exact situation a few years ago, I want to emphasize a few key points that might help ease your stress: First, you're absolutely not alone in discovering this requirement late - the U.S. is unique in taxing citizens on worldwide income, and many dual citizens living abroad are completely unaware of this obligation initially. Given your income level of roughly $10,000 USD, you're in a very good position. The Foreign Earned Income Exclusion for 2024 is $120,000, so your entire income would be excluded from U.S. taxation. You'll still need to file the returns, but you shouldn't owe any actual tax. For catching up on last year, definitely look into the Streamlined Filing Compliance Procedures - it's specifically designed for situations like yours where the failure to file was non-willful (meaning you genuinely didn't know about the requirement). This program allows you to get compliant without facing the usual penalties. One thing to watch out for: if you have any Mexican bank accounts, retirement accounts, or investment accounts, make sure you understand the FBAR reporting requirements. This is separate from your tax filing but equally important. The paperwork can seem overwhelming at first, but once you get through the initial catch-up filing, the annual process becomes much more routine. Don't let the stress get to you - with your income level and circumstances, this is very manageable.