On Friday 27th March, the CARES (Coronavirus Aid, Relief and Economic Security) Act became law.
The CARES Act is intended to provide economic assistance and stimulus to American businesses and individuals – including expats – affected by the 2020 global Coronavirus pandemic.
Among the measures contained in the stimulus is the provision of a Recovery Rebate check to all American citizens (including Americans living abroad) who meet certain criteria to help them financially during what is a challenging time for everyone.
How much are the stimulus checks?
The stimulus Recovery Rebate check is worth a maximum of $1,200 per individual taxpayer, or $2,400 for married couples filing jointly. Furthermore, each dependent child under the age of 17 means an increased payment of $500 per child.
The stimulus checks are available to taxpayers whose adjusted gross income (i.e. income after allowable deductions) is less than $99,000 (or $198,000 for a married couple filing jointly).
However, the full amount is available for individuals whose adjusted gross income is up to $75,000 ($150,000 for couples filing jointly), with the amount received phasing out above this threshold up to $99,000.
“Under the CARES Act, Americans living abroad are eligible to receive the Recovery Rebate alongside Americans in the US.” – WRCBtv
How can expats get their stimulus check?
Under the CARES Act, to qualify, expats (and their spouse and dependents, to receive the additional amounts) must have a US social security number.
The IRS is using the gross adjusted income reported on 2019 tax returns, or, if 2019 tax returns haven’t been filed yet, 2018 tax returns, to see who gets a stimulus check.
Expats who included US bank details on their 2018 or 2019 tax return for a refund (or perhaps to receive the refundable Child Tax Credit) will automatically receive the Recovery Rebate as a direct deposit.
Otherwise, the IRS is expected to mail a check based on expats’ addresses as reported on their 2018 or 2019 Form 1040.
Expats who filed in 2018 without providing US bank details, but who don’t want a check mailed to them perhaps due to the inadequacy of the foreign postal system where they live should file their 2019 as soon as possible, providing their US bank details.
What else do expats need to know about the stimulus checks?
Stimulus checks are treated like a tax rebate, which is to say that they aren’t taxable income, and they don’t need to be repaid.
Expats who haven’t been filing US taxes from abroad because they didn’t know that they had to can catch up without facing penalties and so receive the Recovery Rebate under an IRS amnesty program called the Streamlined Procedure.
What else do expats need to know about filing US taxes from abroad in 2020?
Expats normally receive an automatic filing extension until June 15th, however this year expats have until July 15th to file after an automatic 90 day filing (and tax payment) extension was provided to all Americans as part of Coronavirus relief measures.
Expats who require further time to file can request an additional extension until October 15th, too.
For more information about the CARES Act Recovery Rebate, see here.