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Enjoy the Holidays, but Don’t Forget the Tax Man


By Orlando Gotay

A mid holiday celebrations in Mexico and elsewhere, the last thing in most people’s minds is tax compliance. But I wish to take a minute to remind you to think about two items very pertinent to those who live abroad.

Foreign Bank Account Reports (FBAR). If you have financial interest or signature authority over foreign financial account(s), an electronic report must be filed with the US Treasury (not the IRS) if at any time the aggregate value exceeded $10,000 dollars during calendar year 2015. That goes for personal and business accounts. This report is due on April 15, with residents abroad receiving a two-month extension to file, just like income tax returns. Now is the time to see if you come close to that reporting threshold. Treasury will soon announce the official exchange rate to be used in valuing Mexican Peso denominated accounts.

Form 8938, Statement of Specified Foreign Financial Assets (FATCA reporting). Unlike FBARs, this report is filed with tax returns if you own “specified” foreign financial assets exceeding a specific value. Thresholds are different if one lives abroad and depend on filing status. A person living abroad with single filing status must file if the total value of specified foreign financial assets exceeded US$200,000 on December 31 or US$300,000 at any time during the year. Much lower thresholds apply if one does not qualify as living abroad. Clear as mud, eh? No wonder people don’t want to deal with this during the holidays. The official exchange rate also applies to this calculation.

The types of reportable “foreign financial assets” are ample. Some examples: the financial accounts from above, foreign private pensions (like Canadian RRIF/RRSPs), being a beneficiary of a foreign estate, and foreign trusts. Regrettably, this also includes Mexican Land Trusts “fideicomisos” that do not meet stringent IRS requirements.

Celebrate away, but don’t forget. The information you have in your hands now may be critical a little way down the road.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court, and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at


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