I filed—now what?

I filed—now what?

By Orlando Gotay


If you filed a federal (and state) tax return, congratulations! While it is an obligation to comply with the tax laws, I think that in pandemic conditions, it may be a bit of an achievement to have filed a timely tax return.


The 60-day automatic “expat extension” disappeared this year. The due date of this year’s return was always April 15, but the “expat extension” was overtaken by the broader one Secretary Mnuchin granted everyone to July 15. The next available extension had to be filed by July 15, granting a 6-month extension to file a return—but not to pay any tax due.


Speaking of extensions, the Foreign Bank Account Report (FBAR) due date is always April 15, but it also has a six-month automatic extension (meaning no form needed to get an extension) to October 15. If you are required to file this report, now is the time to begin putting the information together.


By way of general refresher, if a U.S. person has ownership, control, or signature authority of foreign financial accounts, whose maximum value is greater than US$10,000 in the calendar year, an FBAR must be filed by the due date. That includes accounts that aren’t yours. Think of HOA associations, work-related foreign accounts, or your non-U.S.-person spouse if you have any authority in disbursing funds in those accounts.


One important item: Determine the end-of-year exchange rate set by the Treasury to convert foreign currency values into dollars to see if you are close to US$10,000. There is a last-minute amendment to the Mexican peso rate (to 22.4910 MXN/USD). If you are close to the borderline, it may make a difference.


If you were due a stimulus payment but haven’t received it, perhaps reaching out to the IRS may be helpful, considering the IRS is still behind issuing payments to taxpayers with foreign addresses. Both Form 3911 and special instructions are available at the IRS’s “Economic Impact Payment Information Center.”


For retirees with a “required minimum distribution” from retirement plans: The requirement was lifted for 2020—great news if you had to make the withdrawal but did not need the money. Better yet, you may still be able to return it (rollover) the “unnecessary” distribution by August 31, 2020. Tacos for another day! 


Also new: Penalty-free distributions for some “coronavirus related distributions” during 2020 with income tax payable over three years. Good news all around!

Orlando Gotay is a California-licensed tax attorney (Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court, and other taxing agencies. His love of things Mexican has led him to devote part of his practice to federal and state tax matters of U.S. expats in Mexico. He can be reached at tax@orlandogotay.com; Facebook: GotayTaxLawyer; or WhatsApp at +1 760 449 1668. This is just a most general outline. It is informational only and not meant as legal advice.