The Foreign Service Journal, May 2003

file an amended return on Form 1040X to obtain a refund of the tax paid. The catch is that the claim must be filed, as any other refund claim, within the time limits speci- fied by the Internal Revenue Code. Taxpayers who sold a home in 2000, for example, and were forced to pay capital gains tax, must file an amend- ed return by April 15, 2004, for a return filed on or before April 15, 2001, to obtain a refund of tax paid. (Returns filed before a due date are considered to have been filed on the due date.) Taxpayers who obtained an extension of time to file for the original return may qualify for addi- tional time to file an amended return. It would be prudent, howev- er, to submit such a claim immedi- ately, to avoid disappointment should the “temporary” regulations be amended in an unfavorable way prior to finalization. Finally, the tax treatment of gain on a home used partially for busi- ness or rental has also changed, and refunds based on retroactive appli- cation of the new regulations are available. However, Foreign Service personnel who might qualify for a refund should consult their tax advisers immediately since claiming refunds is not always a straightfor- ward process. Thus, if thousands of dollars are at stake, the relatively small fee charged by a tax adviser would be well worth it. Overall, the new regulations are a boon that could help Foreign Service personnel recover from the previous law’s inflexibility, pending more specific and still-needed relief for Foreign Service and military families. Edward J. Michal, a retired FSO, is currently working as a tax prepara- tion specialist for Liberty Tax Service in Austin, Texas. He can be reached at edwardmichal@yahoo.com. M A Y 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 23 F S F I N A N C E S