A Reader asks: ‘I live in Senegal. My third stimulus payment arrived as a check! How can I cash it here?’

And even though the IRS set up a “Get My Payment page on its website more than a year ago, many expats who’ve tried to use it have said it’s still not capable of accommodating foreign addresses or phone numbers, let alone foreign bank account details, such as IBANs (International Bank Account Numbers).

Last month the Democrats Abroad listed such issues in a detailed, five-page letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig, entitled “Re: Improving IRS service to Americans Abroad.”

Here, U.S.-based Marina Hernandez – founder of MHTax, a tax advisory firm, and an investment adviser with Dynamic Wealth Advisors/Swiss American Wealth Advisors, who also writes a tax education blog called The Crossborder Planner – explains what the AXFNJ reader in Senegal, and others like him, might do to access their CARES Act funds, when they arrive in check form in a country where checks are difficult – if not impossible – to cash…

[Editor’s note: This is an updated version of a piece Hernandez wrote for us in March, which we are revisiting because of the apparently huge continued interest in the matter.)

To the Editor: "I’m a retired U.S. citizen who currently lives in Senegal.

"Although I received my first and second CARES Act Economic Impact Stimulus payments on IRS-issued, pre-paid debit cards, the third check, for some inexplicable reason, arrived as a paper check.

"This is a problem, as I don’t have a bank account here in Senegal, or back in the States, and I’m told that the banks here won’t cash it.

"So I’m currently trying to find a quicker way to cash it than mailing it back to the IRS, in the hope they’ll actually get it, realize it’s mine, and re-issue the money to me via my debit card.

"What do your experts think I should do?"

Marina Hernandez answers:

More than a year ago, when the first coronavirus stimulus law – the so-called CARES Act – was signed into law by President Trump, we at The Crossborder Planner received lots of messages from Americans living abroad, who all shared the same problem: they didn’t know how to cash their IRS checks, living where they did.

Fast forward to today, as the IRS continues to distribute the third round of the U.S. government-funded Economic Impact Payment stimulus checks to individuals. (We'll call this third payment "EIP3" for short...)

EIP3s, which were the first EIPs to come out since Joe Biden entered the White House in January, are larger than the first two payments. Specifically, they're US$1,400 per individual, including dependents without age limitation.

There are income phase-out limitations, though. For single households, the checks begin to phase out at US$75,000 of AGI and completely phase out at US$80,000. For married households, the phaseout is between US$150,000 and US$160,000.

(Want to know if you qualify? I recommend this Kiplinger "Third Stimulus Check Calculator"  to find out.)

Back in April 2020, we recommended that every American overseas who happened to already have a U.S. bank account provide this bank account information to the IRS, via a tool that the IRS had set up for this purpose. That's because the safest and fastest way to receive the EIP checks is by direct bank deposit.

And many of you did.

This tool was closed in May 2020, though, and is no longer available. So that’s not an option this time around.

But if you received your EIP1 or EIP2 by direct bank deposit, the IRS will automatically send your EIP3 the same way.

Similarly, if you previously received your EIP in the form of a check mailed to you by the IRS, the IRS will likely send your EIP3 to you the same way again – unless you provided your bank account information to the IRS when you filed your 2019 or 2020 U.S. tax return.

For those expats who have a U.S. bank account that the IRS doesn't have the details of, there are four options, as I see it – one of which I would be wary of using unless they had absolutely no alternative, as I explain below.

I might add, given the date – i.e., expats' taxes are due on June 15 – that this information can also be helpful for those Americans abroad who receive U.S. tax refunds that they need to cash. 

Options for those with a U.S. bank account
that the IRS doesn't have the details of:

Option 1:  With U.S. accounts, in most cases you should be able to use your bank’s mobile deposit app to deposit the check. However, sometimes, U.S. mobile deposit apps don’t work abroad.

If your mobile deposit app doesn’t work where you live, try using a VPN to access the app from a U.S. server. Sometimes this does the trick.

There are many different companies providing VPN apps that could help you to overcome U.S. mobile bank app restrictions in your country of residence.

Option 2: If you have a U.S. bank account but you're not able to download or access your bank’s mobile app from overseas, you should be able to mail the check to your bank, at its U.S. address, for deposit (Yes, I'm talking about putting it in a new envelope, addressing it and adding the correct amount of postage, in the usual way.)

Before you do this, though, call your bank to find out exactly how they'd like you to mail it.

It can be a bit costly and slow to go this route, and, of course, not every country’s postal service is reliable. If you're concerned that you might not be able to rely on the postal service where you live, you may be able to use a private courier service, such as FedEx or DHL.

Option 3 (the hack option): Only use this method if you have family or close friends in the U.S. whom you're certain you can trust, and who also won't mind doing this for you. If you're sure this is the case: Ask them to download your bank’s app, and using it, to deposit the check on your behalf.

How can this be done when the physical check is in your possession? By text, email or a direct message app.

You can take a photo of the front and back of the EIP3 check with your phone, and send the photos to your trusted U.S.-resident person. They can use these photos to deposit the check in your account, using your mobile app, which presumably will work there because they're in the States.

Immediately after the check is successfully deposited, you should change your bank login details, in order to prevent accidental access to your bank information by unfriendly third parties.

I should add a BIG WARNING here: Only use this hack if you're 100% sure you can trust this other person. Providing your bank account login information to a third party, even if only briefly, could be disastrous if the person is not trustworthy. Proceed with extreme caution.

Option 4: Traveling to the U.S. this summer? If you don't have an urgent need for the funds right away, and have plans to travel to the U.S. in the near future, you may wish to consider waiting, and depositing the EIP3 check while you're there.

EIP3 checks are valid for a year from the date of issue.

Options for those
without U.S. bank accounts

Many U.S. expats, of course, don't have a U.S. bank account anymore at all. For them, there are a few options.

Let's look at their options for depositing or cashing their EIP3 check, when it arrives...

Option 1: Open a U.S. account from abroad

The State Department Federal Credit Union (SDFCU), under a program introduced by the American Citizens Abroad a few years ago, allows Americans overseas to open an SDFCU bank account, which is located in the U.S. Information on this program, which the ACA facilitates for ACA members,  may be found by clicking here.

One point to note: The SDFCU app cannot be downloaded from abroad – so if you opt to go the SDFCU route, you will need to use option 2, 3 or 4 listed above to deposit your check.

Certain other banks and investment firms, such as Charles Schwab, allow expats to open accounts from abroad, in certain countries. Schwab’s mobile app can be downloaded and used in some of foreign countries to deposit U.S. checks, which is very convenient.

If Schwab doesn't allow you to open an account in your country of residence, due to regulatory restrictions, you may be able to open an account with another U.S. brokerage firm.

This varies from country to country, though, so you will need to research the options and restrictions that apply to you.

Option 2: Don't want or can't open a U.S. account, and live in Switzerland

Those who don't have a U.S. account and don't particularly want one, or who would find it difficult to get one – and who live in Switzerland – can take advantage of an option that UBS offers those of its clients who have a U.S. dollar account. They are able to deposit their EIP3 checks via UBS for a US$30 fee.

Those who have a UBS Swiss franc account will also be able to deposit their checks in a similar manner, but will also be obliged to pay a fee. (Always make sure to find out what, if any, foreign transaction fees will be charged before making any U.S. deposit in a non-U.S. bank.)

Those with a Credit Suisse bank account, meanwhile, may deposit their EIP3 check, but they'll need to pay a CHF20 check deposit fee, plus 2.5% of the first CHF1,000, and another 1% up to CHF50,000.

Additional foreign exchange conversion costs would typically apply if an EIP3 recipient were to seek to deposit their check to a non-U.S. account.

Option 3: Don't want or can't open a U.S. account, and live in a foreign country other than Switzerland

For those American EIP3 recipients who live in a foreign country other than Switzerland, there's always the option of asking their local bank about depositing the check.

Many European banks no longer allow check deposits – they have moved on, as this publication reported recently,  in connection with EIP1 and EIP2 checks in the Netherlands – so it's possible, even highly likely, that this could be a waste of time.

When that’s the case, opening a U.S. bank account may be the best alternative.

Another idea we have heard from some of our readers involves the American EIP check recipient endorsing it to someone else, and having them then deposit it in their own U.S. account – and then transfer the money via wire to a non-U.S. account owned by the EIP check recipient.

Anyone considering this option should be aware that many banks consider third-party endorsements risky, and that they may not honor such endorsed checks for deposit.
Those planning on attempting this option should check in advance with the relevant bank, to ensure that it would be willing to accept such a third-party check, before they formally endorse their EIP check to someone else.

And, of course, again, it's worth stressing that they be 100% sure that the individual to whom they're endorsing their EIP3 check is trustworthy, otherwise they might never receive a penny.

The good news

Yes, there is good news, beyond the fact that so many Americans are in the process of receiving a sizeable check from the U.S. government.

For one thing, as noted above, the vast majority of the EIP3 payments will be made directly into their respective American citizens' bank accounts.

And because, unlike EIP1 and EIP2, these payments are coming after the IRS has had another year's worth of taxpayer bank information to collect, there should be fewer expats around the world struggling to cash paper checks, as many will have supplied the IRS with their U.S. bank details when filing their tax returns.

For those who are still receiving their EIPs in the mail, the options, at least, are better known than they were the first time around.

Meanwhile, those who still have questions about these payments, the IRS has put together some answers, on a website page that may be viewed by clicking here.
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Marina Hernandez, pictured above, is an Enrolled Agent and Certified Financial Planner, based in the Philadelphia area of Pennsylvania, who advises Americans living in Switzerland and Swiss families living in the U.S. She's the founder of MHTax, a tax advisory firm, and an investment adviser representative with Dynamic Wealth Advisors (dba Swiss American Wealth Advisors), and provides international tax education via a blog, The Crossborder Planner, and as a guest lecturer at the Global Financial Planning Institute.

This article is taken from The Crossborder Planner, where it may be read by clicking here.

The content provided on The Crossborder Planner site is information of a general nature and does not seek to address the circumstances of any particular individual or entity. Readers are urged therefore not construe any of the information or other material shared on the site as advice of any nature, be it legal, tax, investment or other.