Income Tax: Usually your place of employment will take care of all of your taxes and filing with a government agency named “Hacienda.” The Hacienda is the same thing as British Inland Revenue, Revenue Canada, or the IRS. You don't have to do anything... just collect your paycheque and everything will be automatically done for you. There is no annual tax return to file.
Income tax is greatly simplified here. There is a state tax (IVA) of 10%, a federal tax (ISR) of about 10% to 35% which varies according to your income, and medical insurance (IMSS) of about $200 pesos per month per family. The IMMS also changes depending on your income. Most foreigners usually buy seperate medical coverage. For more info on medical click on Health Care.
If you are self-employed then you need to go to the Hacienda and get an RFC number issued. You will be submitting taxes to them directly every 3 months and then in the Spring you need to reconcile your previous years tax. You will be billing your customers the 10% IVA tax. This is similar to the Canadian GST system or European VAT. You will need to hire a bookkeeper/accountant to help you fill out all the paperwork. This will cost 300 pesos per month for a simple self-employed situation.
Tax on your house or apartment: A typical apartment in town has annual taxes of USD $60. No that is not a typo... USD $60. A 10% tax is added to your utility bills.
Foreign Income: There seems to be no foreign income tax for foreigners living here with an FM3 work permit. Technically you are not declared to be a resident under the FM3 program. If you are telecommuting, making investments, or writing a book and your clients are outside of Mexico then the government does not tax you. You are taxed only on Mexican income. Your non-Mexican income is a matter between you and the government in the country you are from.
Canadians must pay taxes on all their world wide income thus you may want to get yourself declared to be a non-resident of Canada while living here. Revenue Canada will give you guidelines on how to get this declaration. Basically you must have no assets in Canada whatsoever. No bank accounts, real estate, or anything. You don't have to file the annual T1 after you are certified non-resident. Tip: If you have investments it is better to open an account at a U.S. firm filing an IRS W8-BEN non-US resident form. Then you won't pay taxes to Canada or Uncle Sam.
Non-US-Resident Americans are exempt from the first USD $80,000 of income but it must be declared on your annual 1040. For high income earners you should be aware of the ‘Charlie Chaplin' rule if you plan to leave the US permanently.