As a US expat, you’re accustomed to navigating the complexities of living abroad. But there’s one opportunity you don’t want to miss – claiming your federal stimulus checks, also known as Economic Impact Payments, which can amount to up to $3,200. The final deadline is looming: June 15th, 2024. This is not just another date on the calendar; it’s your last chance to access funds that could significantly support your life overseas. In this article, we’ll guide you through the essentials of becoming compliant and how to claim what’s rightfully yours. Remember, it’s now or never!
What Are Stimulus Checks?
Understanding the Basics
The stimulus package, officially known as Economic Impact Payments, was introduced by the federal government as a response to the economic challenges posed by global events. These checks are designed to provide financial assistance to American citizens, including those living abroad.
Eligibility Criteria for US Expats
The eligibility criteria for U.S. expats to claim the government relief package issued by the IRS during the COVID-19 pandemic are as follows:
- U.S. Citizenship or Residency: You must be a U.S. citizen or U.S. resident alien.
- Dependent Status: You must not be claimed as a dependent on someone else’s tax return.
- Social Security Number: You must have a valid Social Security Number (SSN). If you or your spouse is a military member, only one of you needs a valid SSN.
- Income Limitations: For the third stimulus check, individuals earning up to $75,000 annually and married couples earning up to $150,000 annually were eligible for the full $1,400 stimulus payment. Payments phased out entirely at $80,000 for individuals and $160,000 for married couples filing joint returns.
- Tax Filing: Even if you live overseas, you qualify if you fall within the income threshold, have a social security number, and file taxes.
The IRS uses your tax return information to determine your qualification for the stimulus check. This means that if you haven’t filed your taxes while living abroad, now is the time to do so.
The Importance of Compliance
Why Compliance Matters
For US expats, being tax compliant isn’t just about fulfilling legal obligations; it’s a gateway to benefits like extra money. Compliance ensures you’re in good standing with the IRS and eligible for any financial relief programs the US government offers.
Dispelling Fears and Misconceptions
Many expats hesitate to become compliant due to misconceptions about owing large sums in back taxes or penalties. However, this is often not the case. The US has tax treaties and mechanisms like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) to prevent double taxation. Our goal at 1040 Abroad is to navigate these complexities with you, ensuring you’re compliant without unnecessary burdens.
How to Claim Your Stimulus Check?
Essential Steps for Claiming the Recovery Rebate Credit
The key to claiming your stimulus checks is filing your 2020 and 2021 tax returns. Here’s what you need to do:
- File Your 2020 and 2021 Tax Returns: If you haven’t already filed these returns, it’s crucial to do so immediately. The stimulus checks are claimed through the Recovery Rebate Credit on these returns.
- Claim the Recovery Rebate Credit: On your 2020 and 2021 tax returns, you’ll find a section for the Recovery Rebate Credit. This credit allows you to claim any stimulus payments you were eligible for but did not receive. Be sure to accurately calculate the credit, essentially the stimulus check amount you’re entitled to.
- Understand the Deadline: Due to the three-year statute of limitations for claiming a tax refund, the final opportunity to file these returns and claim your stimulus checks is rapidly approaching. The deadline is June 15th, 2024, so acting now is imperative.
- Gather Necessary Documentation: You’ll need all relevant income statements and other financial documents from 2020 and 2021 to file these returns. This includes W-2s, 1099s, and any records of foreign income.
- Submit Your Returns: File your 2020 and 2021 tax returns with the Recovery Rebate Credit included. If you’re unsure how to do this, seek assistance from a tax professional specializing in expat tax issues.
- Track Your Refund: After filing, you can track the status of your refund through the IRS’s “Where’s My Refund?” tool. This will give you updates on when to expect your stimulus payment.
Important Note: The Streamlined Compliance Procedures
A Lifeline for Delinquent Filers
If you’re a US expat who hasn’t filed your tax returns for previous years, there’s a crucial program you should be aware of – the IRS Streamlined Compliance Procedures. This program is designed as an amnesty for individuals like you, offering a way to become compliant without facing penalties for failure to file before.
How the Streamlined Compliance Procedures Work
- Eligibility: This program is available to US citizens living abroad who have not willfully neglected their tax filing responsibilities. It’s intended for those who were unaware of their filing obligations or had other non-willful reasons for non-compliance.
- Benefits: The major advantage of the Streamlined Compliance Procedures is the waiver of failure-to-file and failure-to-pay penalties. This can represent significant savings and reduce the financial burden of becoming compliant.
- Process: To participate, you’ll need to file the last 3 years of federal tax returns and 6 years of FBAR (Foreign Bank and Financial Accounts Report) declarations, if applicable. You’ll also need to submit a signed statement certifying that your failure to file was non-willful.
- Professional Assistance: Navigating the Streamlined Compliance Procedures can be complex, and it’s advisable to seek help from a tax professional. They can ensure your filings are accurate and the process is as smooth as possible.
Why Act Now
With the June 15th, 2024 deadline for claiming your stimulus checks through the Recovery Rebate Credit, the Streamlined Compliance Procedures offer a valuable opportunity to become compliant and claim what you’re entitled to. Don’t miss this chance to rectify your tax situation and benefit from the stimulus checks!
Success Story: Real Expats, Real Relief
John’s Journey: From Overwhelmed to Overjoyed
John, a teacher in South Korea, hadn’t filed his US taxes in four years. Overwhelmed by the filing process and afraid of potential penalties, he initially hesitated to become compliant. However, after learning about the Streamlined Compliance Procedures, John reached out to us. We helped him file his back taxes, including the 2020 and 2021 returns, where he claimed the Recovery Rebate Credit. John was not only relieved to become compliant but was also thrilled to receive his stimulus checks, which he used to pay down his student loans.
The Final Countdown: What Happens After June 15th
Understanding the Consequences of Missing the Filing Deadline
As the June 15th, 2024 deadline approaches, it’s important to understand what’s at stake. Missing this deadline means losing the opportunity to claim your stimulus checks through the Recovery Rebate Credit. These funds, intended to provide financial relief, will no longer be accessible.
However, it’s not just about the Economic Impact Payments. Failing to become compliant can lead to ongoing issues with the IRS, including potential penalties and complications in future financial dealings. It’s about securing peace of mind and ensuring your financial health as a US citizen abroad.
Urgency Without Fear
While the deadline is critical, our message is not to instill fear but to encourage timely action. Think of this as a call to safeguard your rights and benefits as a US expat. It’s a reminder that taking action now can lead to significant financial and personal relief.
How 1040 Abroad Can Assist?
Your Partner in Navigating Expat Tax Challenges
At 1040 Abroad, we understand the unique challenges US expats face in managing their tax obligations. Our mission is to provide you with the expertise and support needed to navigate these complexities with confidence.
Our Commitment to Value and Support
Our approach is not about pressuring you into services; it’s about offering value, clarity, and peace of mind. We pride ourselves on being a firm that stands against scaremongering tactics, focusing instead on empowering you with knowledge and solutions. With 1040 Abroad, you’re not just a client; you’re a valued member of a community that looks out for each other, ensuring every US expat has the opportunity to be financially healthy and compliant.
Coronavirus Pandemic Stimulus Check FAQs for U.S. Expats
- Can I still get my stimulus checks?
Yes, you can still get your stimulus checks if you haven’t filed your 2020 and 2021 tax returns and didn’t receive the stimulus money. To claim your stimulus payment, file your 2020 and 2021 tax returns and apply for the Recovery Rebate Credit on these returns. This credit allows eligible individuals who didn’t receive their stimulus checks to claim them as part of their tax refund.
- Are Resident Aliens eligible for stimulus checks?
Yes, resident aliens are eligible for the stimulus check, provided they meet the other eligibility criteria set by the IRS.
- How will I get my stimulus checks if I’m an American living overseas?
If you’re an American living overseas and are an eligible individual for the stimulus checks, you will receive them either through direct deposit or as a paper check. The Internal Revenue Service will use the payment method based on the information they have from your previous tax filings. If your bank account details are on file, you’ll likely receive the payments via direct deposit. If not, the IRS will mail a paper check to the address they have on record for you.
- Are we getting a stimulus check for 2023?
No, no stimulus checks were being issued for 2023. The stimulus checks were a part of the U.S. government’s response to the COVID-19 pandemic and were only distributed in 2020 and 2021.