Coronavirus Pandemic: IRS Tax Deadlines and Changes You Should Know

The events of the Coronavirus (COVID-19) pandemic are unlike any we have ever seen before. The outcome of the crisis will play out in our memories and our history books. While the Coronavirus has impacted everyone around the globe, it is important that Americans living abroad stay updated on important travel and safety information, IRS tax deadlines, and financial news. We urge you to bookmark this page and check back as we learn more over the next few days, weeks, and months.

Last updated March 31, 2020.

Quick Facts: How the Coronavirus Pandemic Impacts US Expats

  • The $2 trillion stimulus package passed on Friday, March 27 provides relief via direct payments to US citizens, expanded hospital funding, unemployment benefits, interest-free business loans, and more.
  • Stimulus payments will be based on income. Americans abroad should make sure they are up-to-date on their US expat tax returns and have set up direct deposit with the IRS to receive their checks as soon as possible.
  • Taxes are now due July 15th for all Americans, including those living abroad. The IRS gave all taxpayers an automatic extension to file and pay income taxes penalty-free, regardless of the amount owed.
  • If you think you may be owed a refund, file early to receive your refund in as little as 21 days.
  • Tax credits are available for small and midsize businesses to offset the cost of Coronavirus-related leave for employees.
  • Coronavirus-related travel restrictions do not apply to US citizens and residents. Americans who live in the US  are encouraged to return home as soon as possible.
  • Greenback is committed to helping Americans abroad weather this crisis by providing critical safety information, financial news, and tax-savings advice. Our 100% remote team will continue to provide the most up-to-date facts and recommendations.

Coronavirus Stimulus Benefits for Americans Abroad

The US government has passed into law a $2 trillion stimulus package to address the broad economic impact of the Coronavirus pandemic. The stimulus includes:

  • Direct payments to Americans
  • Expanded healthcare funding
  • Unemployment benefits
  • Aid for contractors and ‘gig’ workers
  • Interest-free business loans
  • Funds for the evacuation of Americans–which may be used

How Stimulus Payments Will Work for Americans Abroad

Americans living abroad will qualify for aid, including direct payments. Because income levels will determine the amount of relief money individuals receive, you’ll want to be up-to-date on your tax filings to make sure you get the correct payment. Here’s how stimulus payments will work:

How Much Money Will I Receive?

  • Single Americans with income less than $75,000 will get $1,200.
  • For individuals with incomes over $75,000, payments will reduce by $5 for every $100 in income above $75,000.
  • Those making more than $99,000 will not receive payments.
  • These thresholds and payments are doubled for married couples.
  • Parents will get a $500 payment for each child under age 17, regardless of income.

How Will the IRS Calculate My Payment?

If you’ve filed it, income will be based on your 2019 tax return. If you have not, payments will be based on your 2018 income.

How Will I Receive My Payment If I’m Abroad?

Payments will be delivered via direct deposit, which is good news for expats. For those who have not set up direct deposit or need to update this information, the Treasury will provide a web-based portal to collect banking information in the coming weeks.

When Will Stimulus Payments Be Sent?

For Americans abroad who are up-to-date on their taxes and have provided direct deposit information, payments may begin to arrive in April. However, the IRS has not provided a detailed schedule for payments.

What If I’m Behind on My US Expat Taxes?

Consult with an accountant to file your 2018 and 2019 tax returns as soon as possible. To make sure taxpayers have ample time to file accurately, stimulus payments will be available throughout 2020. However, working with a professional can help you file quickly to get benefits sooner and cross taxes off your to-do list.

This is a developing news story and the experts at Greenback will share the latest information as we learn more.

Changes to the IRS Tax Deadlines Due to Coronavirus

In response to the growing concern over the Coronavirus (COVID-19) pandemic, the IRS announced on March 21st that it had extended the deadline for Federal income tax returns from April 15, 2020 to July 15, 2020.  All taxpayers—including individuals, trusts and estates, corporations, and those who pay self-employment tax—can defer payments until the new deadline regardless of the amount due.

IRS will automatically provide this relief to taxpayers. You do not need to file any additional forms or call the IRS to qualify for the extended tax payment deadline.

Why You Should Still File Early

Despite the new deadline, the IRS encouraged taxpayers who are owed a refund to file as early as possible so they can get access to these funds quickly. The IRS has made it a priority to continue accepting returns and processing refunds. Currently, most refunds are processed within 21 days. With many Americans at home and abroad concerned about finances in the current environment, a tax refund may bring significant relief and peace of mind.

So what does this mean for you? The IRS tax deadlines have been moved to July 15th. But if you are owed a refund, you can file now to receive your funds ahead of the due date—within about 21 days of filing.

List of New US Tax Deadlines for 2020

Here’s a list of regular tax deadlines and how they have been impacted by the IRS’s response to the Coronavirus pandemic:

April 15th: Regular US Tax Deadline –  This is normally when taxes are due. However, due to the Coronavirus pandemic, the Secretary of Treasury has extended the date to July 15th.

June 15th: Regular Extension for Americans Abroad – Typically, expats receive an automatic two-month extension on their US filings. However, due to the coronavirus pandemic, the IRS has extended this deadline to July 15th as well. Note that both the tax filing and tax payments are now due on July 15th.

July 15th: New 2020 Tax Deadline for All Americans – This is the new US tax deadline for Americans living in the US and abroad. Normally, if taxes due to the IRS are not paid by April 15th, interest accrues and/or penalties can be assessed. With the breaking news from the IRS, all taxes owed can be auto extended to July 15th without interest or penalties.

October 15th: IRS Extension Deadline – All expats are eligible to extend their tax return due date to October. Expats who are not ready to file by June 15th can submit IRS Form 4868 to extend their tax deadline to October 15th.

December 15th: Special Extension for Americans Abroad – Americans living abroad can write a letter to the IRS to request a final two-month extension to December 15th. Note: This is a discretionary extension and not automatically granted. Thus it should only be used as a last resort should you not have your proper paperwork in on time or other extenuating circumstances. Some expats may need more time to qualify for the Foreign Earned Income Exclusion, which, in most cases we recommend you file Form 2350 for additional time instead of trying a December extension.

Tax Deadline Changes State-by-State

While the IRS tax due date extension applies only to your Federal taxes, there’s also a flurry of activity and tax changes happening state-by-state in response to the Coronavirus pandemic. It’s important you keep a close eye on your specific state changes and you can monitor this list of state filing relief run by the American Institute of CPAs.

Not sure if you need to file a US State Tax Return? If you, your spouse, or your children have lived in a state at some point during the year, you maintain residence in a state, or you keep a driver’s license, ID card, or voting rights in a state, you may be required to file a US State Tax Return. There are some states that do not require filing a State Tax Return.

States Not Requiring Filing a State Tax Return

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington State (not DC)
  • Wyoming

Please note that New Hampshire and Tennessee only assess income tax on dividend and interest income.

Coronavirus Relief for Small and Midsize Businesses 

In addition to relief for individuals, the US government has enacted provisions to help businesses overcome the financial challenges of the Coronavirus pandemic. Relief for American business owners currently includes tax filing extensions and tax credits.

Tax Payment Relief & Deadline Extension

The automatic tax deadline extension to July 15, 2020 applies to businesses as well as individuals. This relief also extends to self-employed freelancers and contractors abroad by extending the deadlines for estimated tax payments in 2020.

Tax Credits for Coronavirus-Related Employee Leave

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, which included  special provisions to help with the financial burdens affecting individuals and businesses in the face of the Coronavirus pandemic. Specifically, the Act will help companies with fewer than 500 employees fund paid leave for workers during the crisis. Qualifying employers can use tax credits to offset certain Coronavirus-related costs dollar-for-dollar:

  • Sick Leave Tax Credit – If an employee who is unable to work due to a Coronavirus quarantine, self-quarantine, or Coronavirus symptoms, eligible employers can claim a tax credit at the employee’s regular rate of pay, up to $511 per day ($5,110 maximum) for up to 10 days.
  • Child Care Leave Tax Credit – If an employee who is unable to work because they need to care for a child whose school or care provider is unavailable due to the Coronavirus, businesses can take a credit equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 total for up to 10 weeks.

In the coming days, the IRS will provide instructions for how to obtain immediate reimbursement for these costs by offsetting employers’ payroll tax payments.

It is important to note that businesses with under 50 employees may be exempt from the requirement to provide leave for child care if it would endanger the viability of the business.

Travel Advice and Restrictions

Due to the global impact of the Coronavirus (COVID-19) pandemic, the Department of State has urged Americans abroad to return home immediately. The government has encouraged expats to book commercial flights. However, some countries have begun closing borders and imposing quarantine protocols, preventing home-bound Americans from leaving. Expats who need assistance should contact their local US Embassy as soon as possible. State Department officials say they are working tirelessly to bring Americans home, though they are unable guarantee transport for all expats during this unprecedented global crisis.

While President Trump has restricted travel from several countries to prevent further spread of the virus, these restrictions do not apply to US citizens and permanent residents. However, Americans may be required to self-quarantine after visiting certain countries. Similarly, US citizens within the country’s borders have been asked to avoid all international travel.

Assistance for Americans Abroad

The State Department has encouraged Americans broad to enroll in the Smart Traveler Enrollment Program (STEP) to receive country-specific safety information and to help the US Embassy contact you and your family in case of an emergency.

If you experience a Coronavirus (COVID-19) related emergency while overseas, you should contact the nearest US Embassy or call:

  • From the U.S. & Canada: 1-888-407-4747
  • From Overseas: +1 202-501-4444

Greenback Team is Here to Help!

The Greenback Team is fortunate to be a 100% remote team distributed around the world – 11 countries and 12 states to be exact. And as many of us are expats ourselves, we’re here to keep you up-to-date and help you navigate all the changes related to your taxes.

We currently recommend that you file your expat taxes as soon as possible, particularly if you think you may be owed a refund. If you do owe taxes, you can file now and hold off on making a payment until the new extended deadline. Planning ahead will help you manage finances and reduce stress during this uncertain time.

Events and circumstances have been changing rapidly, and it is best to stay on top of taxes to take advantage of potential benefits coming your way. We’re here to answer any questions you may have during this confusing time. Please get in touch with us today.

 

Free Guide: 25 Things Every Expat Needs to Know About Taxes

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