The IRS has found an innovative answer to the question of how to deliver Coronavirus Relief Stimulus Payments to Americans, including expats, who haven’t provided details of a US bank account, in the form of a prepaid debit card.
The Stimulus Payments, referred to as Economic Impact Payments (or EIPs by the IRS), were made available as part of a series of measures in the CARES Act, passed on March 27th, intended to provide economic relief to Americans affected by the Coronavirus outbreak.
Stimulus Payments are worth $1,200 per individual adult taxpayer, so $2,400 for married couples filing jointly (assuming both have a US social security number), and $500 per child (again assuming the children have a social security number).
To receive the full amount, expats (in line with all Americans) must have an adjusted gross income reported in their most recent (either 2019 or 2018) US tax return of under $75,000 ($150,000 for expats filing jointly). Above these thresholds, the amount of the payment gradually reduces until it reaches zero at adjusted gross incomes of $99,000 and $198,000 respectively.
Expats who claim the Foreign Earned Income Exclusion should note that adjusted gross income is income after the exclusion has been applied, so a single expat filer with an income of $100,000 for example would receive the full Stimulus Payment.
Expats who would qualify to receive a payment due to their income level but who haven’t filed either 2018 or 2019 tax returns should seek advice from an expat tax specialist. This is because there may be an amnesty program (e.g. the Streamlined Procedure) that will allow them to catch up without paying penalties (and most often neither back taxes) and so become eligible for a Stimulus Payment. So long as they catch up by October 15th 2020 at the very latest, they will still receive a payment.
The IRS originally announced that Stimulus Payments would be deposited directly into a US bank account if they had details for one on file, or otherwise they would mail a check.
“The Treasury and the IRS have been working with unprecedented speed to issue Economic Impact Payments to American families. Prepaid debit cards are secure, easy to use, and allow us to deliver Americans their money quickly.”- Steven Mnuchin, US Treasury Secretary
They subsequently set up an online tool called Get My Payment where Americans could provide US bank account details if they hadn’t already.
Many US expats don’t have a US bank account though, and many struggle to open one, due to not having a US residential address.
This left millions of expats having to receive a check by mail. This isn’t a great solution for many expats though, who would then have to mail the check back to the States to cash it.
The IRS has now announced a solution though. From now on, instead of posting checks, many Americans who file from abroad will receive a prepaid VISA debit card.
The cards are being issued by Metabank. The card can be used like any debit card to make payments, withdraw cash from ATMs, and transfer funds to a personal bank account online without incurring fees. The card also provides consumer protection against loss and fraud.
Cards are being sent to Americans whose tax returns are processed at either the Andover or Austin service centers. According to the IRS website, the Austin service center processes returns of Americans who live abroad, and specifically those who claim the Foreign Earned Income Exclusion.
“The Treasury and the IRS have been working with unprecedented speed to issue Economic Impact Payments to American families. Prepaid debit cards are secure, easy to use, and allow us to deliver Americans their money quickly,” said Secretary Steven T. Mnuchin. “Recipients can immediately activate and use the cards safely.”
Nearly 4 million cards are due to be mailed this week. Expats who are up to date with their US tax filing can check their payment status using the Get My Payment tool.
Expats who require assistance with their US tax filing should always contact a US expat tax specialist for advice to ensure that they file in the most beneficial way possible for their situation.