u.s. expat tax guide – india
US Citizens in India Eligible for 2021 Stimulus Payment
Yes, that’s right. US citizens (and dual Indian/US nationals) living in India can still claim the third stimulus payment—known as the Recovery Rebate Credit—worth US$1,400 per person by filing their 2021 tax return on or before April 18, 2025.
Who qualifies for the 2021 stimulus payment?
To claim the US$1,400 Recovery Rebate Credit, you need to meet specific requirements:
- Social Security Number: You and your spouse (if filing jointly) must have a valid US Social Security Number.
- Income Limits:
- If you’re Single or Married Filing Separately, your adjusted gross income (AGI) must be less than US$75,000 to get the full payment.
- For those Married Filing Jointly, the limit is US$150,000 before the credit starts to reduce.
- Head of Household filers have an income limit of US$112,500.
Dependents: If you have eligible dependents, they might also qualify for the US$1,400 payment, as long as they meet the criteria.
When do I need to file to claim the payment?
To get the 2021 stimulus payment, you must file your 2021 tax return by April 18, 2025. That’s the final deadline for US citizens to claim this credit, so it’s important to make sure you submit your return on time.
How does the Foreign Earned Income Exclusion (FEIE) impact the stimulus payment?
Many citizens assume that if they earn more than the income limit, they won’t qualify for the stimulus payment. But that’s not always the case—especially if you’re using the Foreign Earned Income Exclusion (FEIE).
The FEIE allows expats to exclude up to US$108,700 of their foreign income from their taxable income in 2021. This means, even if you earned more than US$75,000, you could reduce your income by using the FEIE and still be eligible for the payment.
Example:
- Let’s say you earned US$150,000 in 2021 while living in India. Using the FEIE, you can exclude US108,700 from your income, bringing your taxable income down to US$41,300. That’s well within the limit for a single filer, which makes you eligible for the full $1,400 payment.
How does the phase-out work?
The stimulus payment starts to phase out once your income goes over the limit. Here’s how it works:
- For Single filers, the payment phases out between US$75,000 and US$87,000.
- For Married Filing Jointly, the phase-out range is from US$150,000 to US$174,000.
- For Head of Household, it starts at US$112,500 and phases out completely by US$124,500.
How do I get the payment?
If you’re eligible, the Recovery Rebate Credit will be applied directly to your 2021 tax return. This means that if you’re due a refund, the US$1,400 will be added to that amount.
You can choose to have it directly deposited into your US bank account or receive a paper check.
Can US citizens married to non-US citizens claim the stimulus payment?
Yes, you can still claim the stimulus payment even if you’re married to a non-US citizen, but your filing status matters. Here’s how it works:
- Married Filing Separately: If your spouse does not have a Social Security Number, you should file separately to claim your own US$1,400 payment.
- You don’t need to include your spouse’s income on your US tax return in this case, but you do need to clearly indicate your status as Married Filing Separately.
What happens if you miss the deadline?
If you do not file your 2021 tax return by April 18, 2025, you will miss your chance to claim the 2021 stimulus payment. So it’s crucial to act now and make sure your return is filed on time to get any credits you are entitled to.
Should I consult a tax professional?
Yes, it’s especially so when you’re living in India. A tax professional can help you:
- Confirm if you’re eligible for the payment.
- Make sure you use the FEIE or other exclusions to lower your taxable income.
- Ensure all your filings are accurate and submitted on time.
