It’s often said that the over 9 million Americans living overseas get a rough deal with the IRS, as it places numerous US tax and reporting requirements on US citizens abroad.
Today though, Congress passed the CARES (Coronavirus Aid, Relief and Economic Security) Act, which brings important and positive news for US expats around the world.
The current Coronavirus outbreak is a global phenomenon that is affecting Americans living abroad just as much as those in the US, and the CARES Act recognizes this by offering financial assistance to US expats, too.
What is the CARES Act and how does it affect expats?
The Coronavirus Aid, Relief and Economic Security Act, passed today, aims to provide financial assistance to Americans affected by the Coronavirus outbreak.
Among the measures in the Act are a Recovery Rebate payment for every American taxpayer.
The Recovery Rebate takes the form of an automatic, tax-free payment to all Americans, including expats.
How much do expats receive?
Each individual US taxpayer receives $1,200. Married couples who file jointly can claim $2,400 meanwhile, while taxpayers can also claim an additional $500 for each dependent that they have who is under age 17.
“It came as a major surprise when I discovered that we Americans overseas were also entitled to money from the U.S. government under the CARES act.” – US expat tax advocate and international tax attorney Monte Silver
These amounts apply to taxpayers who have an adjusted gross income of between $75,000 and $99,000 (or $150,000 and $198,000 for married couples who file jointly). Expats who earn less than the lower figures receive the full Recovery Rebate amount, while for those who earn more the amount they receive is slowly reduced until it gets to zero.
How do expats qualify for and receive it?
To qualify to receive a Recovery Rebate, expats must:
– Have adjusted gross income of between $75,000 and $99,000 per individual. (Adjusted gross income is total income minus some specific deductions, and is different to taxable income, which for expats is often zero if they claim the Foreign Earned Income Exclusion). So expats can owe zero US tax and still receive the Recovery Rebate.
– Expats must have a US social security number to receive the Recovery Rebate (as do their dependents to receive the dependents rebate).
– Expats must file US taxes. Specifically, they must have filed at least their 2018 tax return, though if they’ve already filed their 2019 tax return, their adjusted gross income will be taken from the more recent filing.
Expats who have provided the IRS with bank account details to receive a refund in the past will receive the Recovery Rebate as a direct deposit. Expats who haven’t will be posted a check to the address on their most recent tax return (so either 2018 or 2019).
There’s never been a better moment for US expats to file.
The majority of expats who file don’t end up owing any US tax once they claim measures such as the Foreign Earned Income Exclusion and the Foreign Tax Credit, and by filing they stand to receive the CARES Act Recovery Rebate.
At Bright!Tax, we understand what you are going through, and we are doing our part to help you get through these difficult times. For this reason, we are offering a $40 discount on your 2019 return with us if you qualify for the maximum Recovery Rebate.