As Bright!Tax partner and managing Certified Public Accountant Allyson Lindsey explained last month, Americans who are resident outside the U.S. are potentially eligible to receive a "recovery rebate" check or automatic deposit, as part of a US$2.2 trillion bipartisan bill aimed at providing emergency relief to individuals and businesses hit by the coronavirus pandemic lockdown.
Here, she addresses further issues expats are having as they try to secure their COVID-19 rebate money, including the fact that they don’t need a U.S. bank account to receive it...
While much of the rest of the world has been self-isolating and working at home, the IRS has, by all accounts (including its own), been working overtime to set up and make operational a system for sending stimulus payments to Americans around the world, as part of its efforts to help the American economy to recover from the devastating effects of the ongoing global coronavirus pandemic.
As of Friday, May 8, the IRS reported that it had sent some 595,548 CARES Act stimulus payments to U.S. expats around the world, at a total value of nearly US$1bn (US$977.83m), which averages out to US$1,641.90 per check or bank deposit.
The exact stimulus payment value that expats receive depends on several factors. As we noted last month, expats with an adjusted gross income of up to US$75,000 will receive a US$1,200 payment, while those who have an adjusted gross income of US$75,001 to US$99,000 will receive US$5 less for every US$100 over $75,000.
Those with an adjusted gross income over US$99,000 don’t receive anything.
For expats who file jointly with their spouse – and whose spouse also has a U.S. Social Security number, a detail that recently emerged as critical, as the AXFNJ, among other media organizations, has reported – all of the above figures double.
So, those whose adjusted gross income is up to US$150,000 receive US$2,400, and after that it is reduced by US$5 for every US$100 over US$150,000, until it phases out completely (at US$198,000).
Meanwhile, qualifying expatriates with dependent children under the age of 17 who have U.S. social security numbers receive an extra payment of US$500 per child.
The bottom line for an American couple who live abroad – and who both have U.S. Social Security numbers – and who have two children under 17 will be eligible to receive a total stimulus payment of US$3,400.
Importantly, those otherwise-eligible U.S. expat citizens who didn't file a U.S. tax return last year, or even recently, because they had gross income that didn't exceed US$12,000 (or US$24,000 for married couples), or who otherwise weren't required to file a federal income tax return for 2019 and therefore hadn't planned to, are still able to apply for the payment by using what the IRS calls its "Non-Filers: Enter Payment Info Here" tool.
When calculating payment values, btw, the IRS looks at expats’ "adjusted gross income" in their 2019 US tax return, or if they haven’t filed for 2019 yet, then their 2018 tax return.
Expats who haven’t filed for either 2019 or 2018 should ensure that they catch up carefully, perhaps using an amnesty program such as the Streamlined Procedure depending on their situation, to ensure they receive a Stimulus Payment but without also receiving a bill for back taxes or penalties.
The U.S. bank account question
For many American expatriates, the big question is whether they will still be able to receive a stimulus payment if they don't have a U.S. bank account, since these tend to be done by direct deposit.
It is true that expats who provided their U.S. bank details on their most recent U.S. tax return can expect to receive their stimulus payment by direct deposit automatically; many already have.
For those who didn’t provide details of a U.S. bank account on their most recent U.S. tax return, the IRS has set up an online tool called Get My Payment that allows expats to provide the IRS with any U.S. bank account details they might have, but simply haven't yet shared with the IRS – although the IRS did specify that they had to have done this by May 13, and despite requests to extend this deadline for expats, is not known to have done so.
Those expatriate Americans who don’t have a U.S. bank account, meanwhile, have two choices: open a new one, and provide the details to the IRS, or receive a check by mail at the address they provided in their most recent tax return.
Expats who don’t want to receive a check by mail, and who don’t have a U.S. address that they can use to open a U.S. bank account may still have options, as we noted last month.
They can either open a State Department Federal Credit Union (SDFCU) account, through a scheme that operates through the American Citizens Abroad, the Rockville, Maryland-based advocacy organization. (Bright!Tax clients can join the ACA at a 50% discount.) In a similar way, Bright!Tax clients can apply to open a United Nations Federal Credit Union (UNFCU) account, about which details may be found by clicking here.
Longer term, as we pointed out last month, such groups as the Democrats Abroad have recently urged Congress and the Treasury to make it possible for the IRS to make payments directly into expats' foreign bank accounts, noting that the U.S. Social Security Administration is able to do this without apparent problems.
So long as expats who haven’t filed either 2018 or 2019 catch up before October 15th, providing their bank details when they do, they will still receive a Stimulus Payment.
If they haven't filed a tax return for some time, they may be best advised to obtain advice from a reputable U.S. expat tax specialist to ensure they don't get caught out unnecessarily with penalties or back taxes.
For those who have been compliant, meanwhile, the IRS has advised that they should provide their U.S. bank details via the IRS's Get My Payment tool as soon as possible to ensure that they receive the payment quickly.
No need to panic just yet, though: officials have said that payments will continue to be paid until the end of the year.
Allyson Lindsey is a partner and managing Certified Public Accountant at Bright!Tax, an online global provider of U.S. tax advice and services for expatriate Americans around the world. Those wishing to stay on top of coronavirus developments from a tax perspective can check out Bright!Tax's Coronavirus News webpage. They can also check out the Economic Impact Payment Information Center page of the IRS's website, by clicking here.
The views expressed above are for general information purposes only, and should not be construed as recommendations or advice for any individual, nor should any action be taken on account of the information presented. Further information may be obtained by contacting Bright!Tax at https://brighttax.com.
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