Guide to Stimulus Checks for US Expats Living Abroad During the COVID-19 Pandemic
Throughout the COVID-19 pandemic, the US government has passed three major acts of legislation that included stimulus payments for Americans living in the US and abroad. Reviewing these details will help US expats determine if you’re eligible for the third stimulus check—and if you can claim a Recovery Relief Rebate on your 2020 tax return.
Do expats get stimulus checks?
Yes, expats have been able to qualify for all three rounds of Coronavirus stimulus payments. All US citizens are eligible, regardless of whether they live in the United States or abroad.
Third stimulus check for COVID-19 relief: What you need to know
On March 11, 2021, President Biden signed into law the American Rescue Plan Act—a $1.9 trillion coronavirus relief bill that includes stimulus payments for individuals, expanded child tax credits, aid for state and local governments, and funds for vaccine distribution.
Stimulus payments under the American Rescue Plan Act
The Act includes a third stimulus payment of up to $1,400 per person for Americans in the US and abroad.
Expats eligible for the full $1,400 stimulus payment include:
- Individuals earning up to $75,000 annually
- Married couples earning up to $150,000 annually
Americans abroad who earn more than these thresholds will receive a portion of the payment—and payments will phase out entirely at $80,000 for individuals and $160,000 for married couples.
In addition, families will receive $1,400 per dependent—which, unlike the previous two stimulus payments, includes adult dependents for the first time.
For this third stimulus check, eligibility will be based on your income as reported on your most recent tax return for either the 2019 or the 2020 tax year. This means that, if you lost income in 2020 due to the COVID-19 pandemic, it is in your interest to file your expat tax return quickly to qualify for the maximum stimulus payment.
US expats who have direct deposit set up with the IRS are expected to start receiving their third stimulus payments within a few days after the Act is signed. Expats without direct deposit will receive paper checks, which will likely be sent out several days after direct deposit payments begin. Expats can check the status of their payment using the IRS’ Get My Payment tool.
Unemployment tax benefits
The American Rescue Plan Act also comes with other tax changes, including a tax exclusion for unemployment benefits. Under the Act, households with annual incomes of less than $150,000 can exclude the first $10,200 of unemployment benefits from taxation.
Child Tax Credit expansion under the American Rescue Plan Act
The Act also expands the Child Tax Credit for American families in the US and overseas. During his campaign for office, President Biden’s tax plan has proposed raising the Child Tax Credit and making it fully refundable—which is exactly what this legislation does.
Prior to the American Rescue Plan Act, the child tax credit worked as follows: the tax credit was worth $2,000 per dependent child under 17 with a Social Security number. The credit began to phase out for married couples with income over $400,000 ($200,000 for single filers/heads of household). Up to $1,400 was refundable (meaning, the tax credit could make you eligible for a refund) for some lower-income families, but you must have earned at least $2,500 to get a refund.
The American Rescue Plan Act will, for one year, includes the following changes to the Child Tax Credit in 2021:
- Expands the credit to children aged 17
- Increases the tax credit amount to $3,000 ($3,600 for children under 6)
- Makes the Child Tax Credit fully refundable and removes the $2,500 minimum income requirement
- Phases out the credit for married couples earning over $150,000 ($75,000 for single filers). Those earning above these thresholds still qualify for the original Child Tax Credit amount of $2,000 per child—so long as their income is below $400,000 for married couples ($200,000 for single filers).
- Introduces periodic payments for eligible families to receive up to half of the tax credit amount in advance via a check from the IRS—from July to December 2021
Can expats claim the new refundable Child Tax Credit?
Currently, the refundable Child Tax Credit is only available to those who lived in the US for more than half of the year, which means that most expats aren’t eligible. Though, if you returned to the US due to the Coronavirus pandemic and have stayed in the US with no intention of moving abroad again in 2021, you might be able to qualify for the refundable child tax credit.
If you stayed abroad during the pandemic, have since moved back abroad, or intend to move overseas in 2021, you won’t qualify for the new refundable version of the Child Tax Credit. Though, you can still qualify for the original version of the Child Tax Credit of up to $2,000 per child—up to $1,400 of which is refundable. But you must have earned income to use the credit, which means it can’t be used on income already excluded from taxation by the Foreign Earned Income Exclusion.
There are other ways to reduce your US tax liability as well, including the Child Care Credit (which is similar to but different from the Child Tax Credit), the Foreign Tax Credit, and the Foreign Housing Exclusion.
Want help claiming tax credits on your expat tax return? Get started now to meet your dedicated accountant today.
Additional Coronavirus Relief in the Act
Beyond these direct payments and tax changes, American Rescue Plan Act includes a range of measures aimed at addressing the health and economic crises created by the Coronovirus pandemic.
Reviewing the Second Stimulus Check for COVID-19 Relief
On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021, a spending bill that includes a $900 billion coronavirus (COVID-19) relief package. This was the second round of US coronavirus tax changes and relief funding, following the CARES Act of March 2020.
The legislation included $600 stimulus checks for qualifying Americans, as well as an additional $600 per dependent under the age of 17. Second stimulus payments were sent via direct deposit, check, and prepaid debit card between December 29, 2020 and January 15, 2021.
Who was eligible to receive a second stimulus check?
Any American—living in the US or abroad—was eligible for a second stimulus check if you:
- Had a Social Security number. Unlike the CARES Act, this legislation allows households in which at least one person has a Social Security number to get the $600 stimulus payment. Expats will also receive $600 per child under 17 with a Social Security number. This change is retroactive, which means that you can claim any qualifying funds not received in the first round of stimulus checks on your 2020 US expat tax return.
- Earned less than $87,000 for individuals, $124,500 for heads of household, or $174,000 for married couples. (Your filing status is based on your most recent US tax return.) Payments will be reduced for individuals who earn more than $75,000 and couples who earn more than $150,000.
- Received federal benefits payments, such as Social Security, disability, Supplemental Security Income (SSI), or Veterans Affairs benefits—even if you don’t earn enough to trigger an annual tax-filing requirement.
- Didn’t earn enough to file and don’t receive federal benefits, but used the IRS non-filers tool to input your bank or mailing information.
- Filed a 2019 tax return, submitted your information through the IRS non-filers tool by November 21, 2020, or currently collect federal benefits. During the first round of stimulus checks, the IRS was able to send payments based on income from 2018 tax returns. However, for this round, the IRS will use 2019 income information only. If you did not file a 2019 tax return but are otherwise eligible for a payment, you will be able to claim this amount when you file your 2020 tax return.
- Were an adult who is not claimed as a dependent by anyone else.
What were the income thresholds for the second stimulus check?
Individual expats who earned up to $75,000 received the maximum $600 payment. As income rose, payments decreased incrementally. Specifically, for every $100 that you made over the limit, your check went down by $5. Payments phased out completely at $87,000. (In comparison, the first round of stimulus payments under the CARES Act capped income at $99,000 for individuals.)
Expats who were married filing jointly and earned up to $150,000 received a total of $1,200 ($600 per spouse). Payments phased out at $174,000. (Under the CARES Act, payments had phased out at $198,000.)
Expats filing as heads of household who earned up to $112,500 received the full $600 payment. Payments phased out completely at $124,500. (First round payments phased out at $136,500.)
The CARES Act: The First Coronavirus Relief Act for Americans Abroad
In March 2020, the US government has passed into law a $2 trillion stimulus package to address the broad economic impact of the Coronavirus pandemic. The stimulus, called the the Coronavirus Aid, Relief, and Economic Security (CARES) Act, 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 CARES Act Stimulus Payments Impacted Americans Abroad
Americans living abroad qualified for aid, including direct payments. Because income levels determined the amount of relief money individuals received, expats needed to be up-to-date on their tax filings to get the correct payment.
How Much Money Did Expats Receive Under the CARES Act?
- Single Americans with income less than $75,000 got $1,200.
- For individuals with incomes over $75,000, payments reduced by $5 for every $100 in income above $75,000.
- Those making more than $99,000 did not receive payments.
- These thresholds and payments were doubled for married couples.
- Parents got a $500 payment for each child under age 17, regardless of income.
How Did the IRS Calculate My First Stimulus Payment?
Income was based on the most recent tax return the IRS had received from you at the time stimulus checks were issued—either your 2019 tax return (filed in 2020) or your 2018 tax return (filed in 2019).
How Do Expats Receive Stimulus Payments Abroad?
Mainly, payments were delivered via direct deposit to US bank accounts. If you had set up direct deposit when filing a previous tax return, no further action was required.
For those who had not set up direct deposit with the IRS—including those who are not required to file a tax return—you could provide your banking information on the IRS website.
Because you needed a US bank account, setting up direct deposit may have been more challenging for Americans living abroad. If you don’t have a US bank account, you may want to consider a State Department Federal Credit Union (SDFCU) checking account, which is available with ACA membership.
When Were the First Stimulus Payments Sent?
Americans abroad and in the US began to receive stimulus payments via direct deposit in April 2020.
What If I’m Behind on My US Expat Taxes?
If you missed previous stimulus checks because you were behind on your US taxes, you can still claim them on your 2020 tax return to be filed in 2021.
Consult with an accountant to get caught up on your US taxes as soon as possible. Working with a professional can help you file quickly to get benefits sooner and cross taxes off your to-do list.
What if I was eligible but didn’t receive my stimulus payment?
If you were eligible for Economic Impact payments but didn’t receive them—or if you received less than you should have—you can claim the missing amount on your 2020 tax return using the Recovery Rebate Credit.
To do so, you’ll use an updated version of the Form 1040 for 2020, which includes the Recovery Rebate Credit on line 30.
Keep in mind, you can claim any missing amounts that you were owed from both the first and second rounds of COVID-19 relief on your 2020 taxes. This includes any funds from the first check that become retroactively available to those without Social Security numbers after the second round of legislation.
Want help claiming your stimulus payment on your US Expat Tax Return?
Were you eligible for an Economic Impact payment but never received one (in either the first or second round) while living abroad? Not sure if you qualified for a direct relief payment for yourself or your dependents? Greenback’s tax experts are standing by to help you navigate the unique tax implications of COVID-19 relief payments.
All of our certified accountants and IRS Enrolled Agents have in-depth knowledge of expatriate taxation and the current tax changes surrounding coronavirus relief legislation. Contact us today to find out how we can help you make filing your expat tax return quick, easy, and cost-effective.
Ready to kick off your expat taxes for this year?
Get started now to meet your dedicated expat tax expert today. They’ll help you find the right filing option for your tax situation, ensure 100% accuracy on your return, and uncover all the best savings opportunities for you. Learn more about working with Greenback.