Published on October 16, 2023
by Jonathan Rose, EA
Jonathan Rose, an IRS Enrolled Agent with 12 years of expat tax experience, specializes in U.S. tax preparation, tax planning, and tax advice for U.S. citizens and Green Card holders living and working in Australia.
Jonathan also talked about family tax benefits in Australia.
If you’re an American citizen or Green Card holder residing in a foreign country, you might be wondering if you’re still entitled to Economic Impact Payments, often referred to as stimulus checks. The answer is generally yes, you are!
Are US expatriates eligible for stimulus payments?
The primary criteria for receiving a stimulus check are your adjusted gross income (AGI) and your tax filing status. For singles with an AGI below $75,000 and couples filing jointly with an AGI less than $150,000, full eligibility is usually granted. But what if your income exceeds these thresholds? In such cases, the stimulus amount you receive begins to diminish.
Additional factors also influence your eligibility. Possessing a Social Security number is essential, as is your status as a dependent on another person’s tax return. The IRS states that the majority of eligible individuals have already been issued their Economic Impact Payments. If you haven’t filed your tax returns for 2020 or 2021, however, you can still claim any payments you’ve missed.
For the first and second stimulus payments, you’ll need to claim them on your 2020 U.S. federal tax return. The deadline for this is May 17, 2024.
For the third stimulus payment, you should claim it on your 2021 U.S. federal tax return, which must be filed by April 18, 2025.
Receiving stimulus checks while overseas
You may be curious about how the IRS will deliver your stimulus payment when you’re far from U.S. soil. The agency primarily uses the direct deposit details from your latest tax return to transfer the funds. If this information isn’t available, a paper check will be mailed to your most recent address on record.
The sum you’ll receive is contingent upon various factors, including your income and the number of dependents you claim. As of March 2023, the IRS has completed the issuance of the first, second, and third Economic Impact Payments. If you didn’t receive the full amount for the third payment, you could be eligible for a 2021 Recovery Rebate Credit when you file your 2021 federal tax return.
Is filing a US tax return necessary for stimulus eligibility?
Absolutely, filing a tax return is essential. The IRS relies on the data from your tax return to assess your qualification for stimulus payments. Failure to file a tax return for the preceding year could result in missing out on these funds.
However, for those who are non-filers due to low income and are not mandated to file a tax return, there’s an alternative. You can still secure your stimulus payment by utilizing the IRS’s Non-Filers tool. Be mindful of the IRS’s specific deadlines for claiming any unclaimed payments.
I want to know more about US taxes abroad
What steps should overdue expatriate tax filers take?
The initial action is to catch up on any delinquent tax returns. The IRS employs your tax return data to gauge your eligibility for stimulus checks. If you’ve neglected to file for the past year, you risk forfeiting these financial incentives.
Another option is to submit an amended tax return to claim stimulus payments explicitly. This approach is especially beneficial if there have been changes in your financial circumstances that could affect your stimulus eligibility.
Where should you pay taxes on your income?
The answer to this question is a bit nuanced. Both the U.S. and Australia have distinct rules for taxing income. As a U.S. citizen or a resident alien, you’re obligated to pay taxes on your global income, in compliance with the U.S. Internal Revenue Code, even if you’re living overseas.
So, how can you strategically allocate your income to lessen your tax burden? The first step is to identify the kinds of income that are taxed differently in each country. For example, certain income types might be tax-free in one country but not in the other. Being aware of this can help you allocate your income more effectively and leverage tax treaties to avoid double taxation.
If this all sounds a bit overwhelming, you’re not alone. That’s where a tax advisor comes in handy. An expert familiar with both U.S. and Australian tax regulations can guide you, helping you allocate your income wisely and maximize the benefits of tax treaties. They can also clarify which income types are subject to tax in each country and how to legally minimize your overall tax obligations.
How to update your overseas address with the IRS for stimulus delivery?
Being an expatriate means you have an international address, adding a layer of complexity to receiving U.S. government payments. So, what steps can you take to ensure your stimulus check arrives without a hitch?
First and foremost, it’s vital to update your address information with the IRS. They will dispatch your stimulus payment to the most recent address they have on record. Have you verified lately whether the IRS has your current overseas address?
Second, understanding the nuances of international address formatting is crucial. Errors in address details can result in delays or even failure in the delivery of your stimulus payment.
For more complex tax issues, consulting a tax expert is often a prudent choice. They can offer specialized guidance and help you capitalize on financial benefits like stimulus payments.
Special circumstances for expatriates in securing stimulus checks
You may be curious about unique situations that could apply to expatriates, such as those without a permanent residence. The IRS will default to the most recent address they have for you, which might be a U.S. P.O. Box or a relative’s residence. To avoid complications, it’s advisable to keep your address information current with the IRS.
Another noteworthy scenario involves U.S. citizens born overseas. Generally, these individuals qualify for stimulus payments, provided they possess a Social Security number and meet income criteria. In essence, your foreign birthplace doesn’t inherently affect your stimulus eligibility.
Missing initial or subsequent stimulus payments
If you missed the first or second round of stimulus payments, you’re probably wondering what to If you didn’t receive the first or second stimulus payments, you’re likely seeking a course of action. One viable solution is to claim these uncollected payments via your tax return. The IRS permits you to apply for a Recovery Rebate Credit for the year in which the payment was missed.
An alternative method is the Economic Impact Payment tracing procedure. This allows you to locate a payment that was dispatched but never reached you. To initiate this, you’ll need to get in touch with the IRS and adhere to their tracing protocols.
Claiming recovery rebate credit for unreceived stimulus funds
If you’ve failed to receive your stimulus payments, the IRS offers a mechanism for claiming them: the Recovery Rebate Credit (RRC). To proceed, you’ll need to compute the RRC when completing your federal tax return. This calculation informs the IRS of both your eligibility and the sum you’re owed.
For those concerned about the requisite documentation, you’ll have to complete either Form 1040 or 1040-SR to claim the RRC. These forms contain a specific line for entering the calculated credit amount. While the process is relatively straightforward, it’s a critical step for securing any stimulus payments you’ve missed.
Steps to take if your stimulus payment amount is inaccurate
Discovering that your stimulus payment falls short of your expectations can be disconcerting. What’s your next move? Initially, you should scrutinize the amounts of your Economic Impact Payments. The IRS provides a secure online portal where you can review the totals for your first, second, and third payments, aiding you in spotting any inconsistencies.
Should you discover an error in the payment amount, you can rectify it via the Recovery Rebate Credit on your federal tax return. Accuracy is paramount here; ensure you reference the total sum of the third payment from your online IRS account or Letter 6475 to minimize mistakes and expedite processing.
Eligibility of non-resident aliens and green card holders for stimulus checks
What about individuals who are non-resident aliens or possess a green card? The IRS outlines distinct eligibility criteria for these demographics. While green card holders are generally eligible due to their tax resident status, non-resident aliens are typically excluded.
The impact between child tax credit and stimulus payments for expatriates
For expatriates with dependents, the Child Tax Credit is another financial aspect to consider. Expatriates usually qualify for this credit, and it can be claimed in conjunction with stimulus payments. How does this serve you? It offers an added financial buffer, particularly if you have dependents.
The maximum allowable claims for eligible dependents are as follows:
- First Stimulus Payment: $500
- Second Stimulus Payment: $600
- Third Stimulus Payment: $1,400
For intricate tax issues, consulting a tax expert is often a judicious choice. Such professionals can offer specialized advice tailored to your specific circumstances, ensuring you maximize your available benefits.
The information provided herein is for general informational purposes only and should not be considered professional advice. While we aim to provide helpful and accurate information, we make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained here or linked to from this material.
Always get professional advice from a US international tax specialist.