Get to know the authorAs part of the 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, also referred to as the stimulus package, passed on March 27th, the US government has granted economic impact payments (referred to in the Act as Recovery Rebates) to all Americans who meet the criteria, including expats.
In the days since the Act was passed, more details have emerged. Here we answer expats’ top 5 questions based on the information currently available.
1 – Who exactly will receive an economic impact stimulus payment?
Expats who have adjusted gross income of up to $99,000 (per adult, so $198,000 for a married couple who file jointly) will receive an economic impact stimulus payment. The full amount is available for those whose adjusted gross income is up to $75,000 ($150,000 for married couples). After these thresholds, the amount of the payment is gradually reduced.
To receive an economic impact stimulus payment, expats must have a US social security number, and have filed US taxes for either 2019, or for 2018, as these are the tax returns the IRS is using to verify adjusted gross income (i.e. income after adjustments).
2 – How much will they receive?
The full amount that qualifying expats will receive is $1,200 per adult. This means that a married couple (both of whom with US social security numbers) who file jointly will receive $2,400. If they also have dependent children under the age of 17 with US social security numbers, they will receive an additional $500 per child.
For expats whose adjusted gross income is over $75,000 (or $150,000 for married couples), the economic impact stimulus payment amount that they’ll receive reduces by $5 for each $100 that their adjusted gross income exceeds these thresholds.
“Expatriates were initially concerned their overseas income would bar them from getting the checks, but the exclusion was removed in the final version of the legislation.” – Bloomberg
3 – Are economic impact stimulus payments taxable income?
No, the economic impact stimulus payments are not considered taxable income, as they are considered to be a tax refund.
4 – How are the economic impact stimulus payments paid?
The economic impact stimulus payments don’t have to be claimed, as they will be paid to expats automatically. The amount paid will be calculated based on the adjusted gross income reported on Form 1040 for 2019, or, if a 2019 tax return hasn’t yet been filed, that reported for 2018.
The payments will be paid by direct deposit into a US bank account if one was provided on either the 2019 or 2018 tax return, or by check if one wasn’t.
The IRS is setting up a web portal for Americans (including expats) who haven’t provided a bank account on their last tax return but would prefer to receive the payment by direct deposit. The portal is hoped to be available by April 17th. Alternatively, expats can file their 2019 return now to provide these details, so long as they have filed 2018 – expats who are behind with their US tax filing shouldn’t suddenly file just a 2010 or provide their bank details, as this may open them up to past non-compliance penalties.
ACA (American Citizens Abroad members can apply for an SDFCU account. (ACA membership is half price for Bright!Tax clients).
5 – What if I haven’t filed a 2018 or 2019 tax return?
Expats must have filed a 2018 or 2019 tax return to receive their economic impact stimulus payment.
Bright!Tax specializes in helping US expats catch up with their US tax filing without facing penalties under the IRS Streamlined Procedure amnesty program, which will also allow them to receive the stimulus payment.
Most expats won’t owe any US back taxes when they file either, if they claim the Foreign Tax Credit or the Foreign Earned Income Exclusion. Expats may also discover that they can claim the refundable Child Tax Credit or another refund payment retrospectively.
In what is a challenging time for everyone, it is a good time for expats who are behind with their US tax filing to catch up. For more information about the Coronavirus economic impact stimulus payment for expats, go to https://brighttax.com/cares-corona-rebate-expats/.
