Jonathan Rose, an IRS Enrolled Agent with 12 years of expat tax expertise, specializes in U.S. tax preparation, tax planning, and tax guidance for U.S. nationals and Green Card holders residing and working in Australia.
US expatriates eligible for stimulus payments:
Your tax filing status and (AGI) are the main requirements for obtaining a stimulus check. Full eligibility is often granted to couples filing jointly with an AGI of less than $150,000 and to individuals with an AGI of less than $75,000. What happens, though, if your income surpasses these limits? In these situations, you start to get less input.
Other variables also influence your eligibility. Having a Social Security number and being listed as dependent on someone else’s tax return is necessary. According to the IRS, most qualified people have already received their Economic Impact Payments. You can still recover any missed payments if you haven’t submitted your tax returns for 2020 or 2021.
You must include the first and second stimulus payments on your federal tax return for the year 2020. This must be completed by May 17, 2024.
The third stimulus payment is due April 18, 2025, and should be claimed on your 2021 U.S. federal tax return.
If you live outside the United States, you might wonder how the IRS will send your stimulus payment. The agency mainly utilizes the direct deposit information from your most recent tax return to transmit the money. Without this information, a physical check will be mailed to the most current address you have on file.
Your income and the number of dependents you claim are two variables that will affect how much you get. The IRS has issued the first, second, and third Economic Impact Payments as of March 2023. On your 2021 federal tax return, you may be entitled to a 2021 Recovery Rebate Credit if you did not get the entire amount for the third installment.
Is filing a US tax return necessary for stimulus eligibility?
Yes, it is very necessary to file a tax return. The IRS uses information from your tax return to assess your eligibility for stimulus funding. This money might be lost if a tax return for the previous year is not filed.
There is an option, nevertheless, for people who do not file taxes because of low income and are not required to do so. You may still use the IRS’s Non-Filers tool to get your stimulus payment. Be aware of the precise dates the IRS must receive unclaimed money.
Catching up on any past-due tax returns is the first step. The IRS uses information from your tax return to determine if you qualify for stimulus payments. You risk losing these tax breaks if you haven’t filed in the previous year.
Another choice is to claim stimulus monies on an updated tax return specifically. This strategy is beneficial if your financial situation has changed and may impact your eligibility for stimulus payments.
Where should you pay taxes on your income?
This question has a somewhat complex answer. Australia and the United States have different income tax laws. Even if you live abroad, you must still pay taxes on your worldwide income as a U.S. citizen or resident alien by the U.S. Internal Revenue Code.
So, how can you divide your income wisely to reduce your tax liability? The first step is determining which income types are subject to varying national taxes. For instance, in one country, some forms of income may be exempt from taxes, but not in another. If you know this, you may use tax treaties to prevent double taxation and distribute your money more efficiently.
You are not alone if all of this seems a little overwhelming. A tax counselor can be helpful in this situation. You may utilize the advantages of tax treaties and manage your income more effectively with the advice of a specialist knowledgeable about both Australian and U.S. tax laws. They can also explain which forms of payment are taxed in each nation and how to reduce your total tax liabilities lawfully.
Since you have an overseas address, receiving money from the US government becomes more complicated if you are an expatriate. What can you do, then, to make sure your stimulus check comes without any problems?
Priority one should be given to updating your address with the IRS. Your stimulus payment will be sent to the most recent address they have on file. Have you recently checked to see if the IRS knows your current address abroad?
Second, it’s critical to comprehend the subtleties of formatting international addresses. Inaccurate address information may cause your stimulus payment to be delivered slowly or not at all.
Consulting a tax professional is frequently wise for more complicated tax matters. They can assist you in taking advantage of financial advantages like stimulus payments and provide expert advice.
Particular circumstances that could apply to expatriates, such as those without a permanent abode, can pique your interest. By default, the IRS will use the most currs they have on file for you, which might be a relative’s home or a U.S. P.O. Box. To avoid problems, it’s essential to maintain your address information and keep it up to date with the IRS.
Another noteworthy circumstance is the presence of foreign-born Americans. As long as they meet specific income standards and have a Social Security number, these individuals are frequently eligible for stimulus funding. Essentially, your eligibility for stimulus is not impacted by the fact that you were born outside of the country.
You may wonder what to do if you cannot get the first or second round of stimulus funds. You’re looking for a plan of action if you weren’t given the first or second stimulus payments. Using your tax return to claim these uncollected amounts is one workable option. The IRS allows you to file for a Recovery Rebate Credit for the year the payment was missed.
The Economic Impact Payment tracking process is an alternate approach. This enables you to track down a payment that was sent but never arrived. You must contact the IRS and follow their tracking procedures to start this.
Subsequent stimulus payments:
You’re probably wondering what to do if you can’t receive the stimulus cash in the first or second round. If you were not given the first or second stimulus payment, you may be looking for a way to proceed. Claiming on your tax return for these unpaid invoices is one workable option. You can claim a Recovery Rebate Credit from the IRS for the year the payment was not made.
The tracing process for Economic Impact Payments is an alternate approach. You may use this to find a payment that was sent but never arrived. To begin this process, you must contact the IRS and follow their tracing guidelines.
What to do if the amount of your stimulus payment is incorrect:
It might be unsettling to find that your stimulus payment does not meet your expectations. What will you do next? First, you should carefully review your Economic Impact Payment amounts. To help you identify any discrepancies, the IRS offers a safe online gateway where you may examine the sums for your first, second, and third payments.
If the payment amount is incorrect, you can correct it on your federal tax return using the Recovery Rebate Credit. To reduce errors and speed up processing, consult the total amount of the third payment from your online IRS account or Letter 6475.
Expatriate stimulus payments and child tax credits:
Another financial consideration for foreigners with dependents is the Child Tax Credit. This credit can be claimed with stimulus payments and is often available to expatriates. How is this helpful to you? It provides an extra financial safety net, especially if you have dependents.
For qualified dependents, the following are the maximum claims that can be made:
- First Stimulus Payment: $500
- Second Stimulus Payment: $600
- Third Stimulus Payment: $1,400
Seeking advice from a tax professional is frequently a wise decision for complex tax matters. These professionals may offer tailored advice based on your circumstances, ensuring you maximize your benefits.
The material provided here should not be interpreted as professional advice; it is meant only for general informational reasons. We try to offer accurate and helpful information, but we cannot guarantee that the information presented here or linked to from this material is accurate, comprehensive, or sufficient.
