Hello pbhsun,
As a US citizen, you will need to report your income worldwide.
However, if you permanently reside in Mexico, then as long as you spend a total of at least 330 days in a consecutive 12 month period in a foreign country, you may claim the foreign earned income exclusion which is currently $91,400. That means the first $91,400 of your foreign earnings would not be subject to US tax.
If you spend more than 35 days in a 12 month period in this country, working or not, you would not be eligible to claim this credit. And that is the only possible tax deduction for you.
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Thank you pbhsun
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad