Tax Guide

Federal Stimulus 2021: Who Is Eligible & How Much Money Will They Get? U.S Based Taxpayers & Americans Abroad

Federal Stimulus 2021: Who Is Eligible & How Much Money Will They Get? U.S Based Taxpayers & Americans Abroad
Ines Zemelman, EA
30 January 2021

Update 21: American Rescue Plan Act of 2021: Key Provisions.

Update 20: The third $1,400 stimulus payments are on their way.

Update 19: California Gov. Newsom signed $7.6B package with $600 stimulus payments.

Update 18: Maryland residents who filed a 2019 tax return and received the Earned Income Tax Credit (EITC) are eligible for the RELIEF Act stimulus payment of $300 for individuals and $500 for families.

Update 17: Recovery rebate credit: what it is and how to avail of it.

Update 16: Non-filer tool no longer in effect.

Update 15: Mixed-status families expected to receive stimulus checks retroactively.

Update 14: Congress passes a new bill - New $600 stimulus check possible.

Update 13: IRS issues guidance for what to do if you are unable to cash the check abroad. 

Update 12: IRS issues clarification: no need to pay back stimulus check if 2020 income makes taxpayer ineligible.

Part of the proposed package includes direct monetary payments from Uncle Sam to US Taxpayers. We explain in detail below who is eligible, what they can expect when they can expect it, and if they will have to pay tax.

Update 11: Payment issued, but not received.

Update 10: International mail outages due to COVID.

Update 9: IRS adds 3,500 to agents accept phone calls from taxpayers about the economic impact payments.

Update 8: IRS will be sending prepaid debit cards to some taxpayers.

Update 7: Helpful tips on cashing IRS checks from abroad.

Update 6: IRS releases guidance on how to return erroneous stimulus checks.

Update 5: Couples with NRA spouses have to choose - file jointly and lose stimulus eligibility or file separately and possibly pay higher tax.

Update 4: How to Navigate IRS Get Payment Page & Changes for Foreign Earned Income Exclusion.

Update 3: IRS Get My Payment Tool Released. See the flow-chart below to determine if you are eligible to use it.

Update 2: IRS Reverses stance, introduces tools for non-filers (those who are below minimum filing requirements) to provide information on where to send stimulus payments. Important - if you have a filing requirement - DO NOT USE THIS TOOL.

Update: The IRS has reversed its stance and senior citizens, Social Security recipients, and railroad retirees who are not otherwise required to file a return will not have to. 

Second stimulus check: $600

On Dec 20, 2020, Congress passed a new stimulus bill that will include additional direct payments to taxpayers. We have released a preliminary article on this matter. 

Who is eligible for stimulus checks?

US tax residents with social security numbers, residing anywhere in the world, will receive checks depending on their income, which we outline below. Those with ITIN will not be eligible.

  Filing mandatory 
  • To be eligible, you must have filed a return in 2018 or 2019.  If you have not yet filed, the IRS urges you to do so now.
  • Those who do not file because they are below minimum filing thresholds do not need to file to receive economic impact payment. The IRS introduced a new tool to enter payment info for non-filers. Note -- The Non-Filers tool has been discontinued as of November 21, 2020.
    • Minimum filing thresholds include income from all sources, anywhere in the world
    • November 21, 2020, at 3 p.m. ET Deadline to Request Your Economic Impact Payment
  • Delinquent taxpayers with filing requirements will not receive payments unless a return is filed. 
  • If filing a joint return, Both spouses on a joint return must have SSN 

In total, how much will taxpayers receive?

As of Jan 30, 2021 — the IRS has issued two rounds of stimulus checks. The first, for $1200 per individual (max), the second for $600. Please read below to find out the details.

The amount taxpayers will receive today will depend on their 2019 income (if already filed), or 2018 if not. If the amount received is less than the full amount to which the individual is entitled, the individual will be able to claim an additional amount based on his or her 2020 tax return when the individual files it in 2021. When individuals file their 2020 tax return in 2021, they can refer to Notice 1444 and claim additional credits on the 2020 tax returns if they are eligible for them

If the IRS used the 2018 return and determined that the taxpayer is not eligible for a payment, and the taxpayer later files a 2019 return that changes the eligibility - the IRS will not issue the payment in 2020, but the taxpayer can claim the amounts based on their 2020 returns in 2021 if they remain eligible.

The figure to look at is the amount of adjusted gross income (Line 8b). If you earned less than the first table (low threshold), you will receive the full amount. The amount is reduced by $5 for every $100 exceeding the lower threshold. Once you reach the upper threshold (right column), the amount is completely phased out. If you filed your 2019 return, the numbers will be based on that. If you have not, the 2018 figure will be used. If you have not filed - get in touch with us ASAP to get started.

If you have no income, you will still be eligible for a check if you have no income or if you rely solely on non-taxable government benefit programs (such as Supplemental Security Income benefits (SSI)).

Stimulus check 1: Lower threshold and below: $1,200 per adult & $500 per child under the age of 17.

Stimulus check 2: $600.

In between: Phase out reduction of $5 per $100 exceeding lower threshold.

Above upper threshold: $0.

Stimulus Check Amounts
Filing Status Lower Threshold Upper Threshold
Individuals (includes MFS, QW) Less than $75,000 $99,000
Head of Household  Less than $112,500 $136,500
Married Filing Jointly (MFJ) Less than $150,000 $198,000

What if my 2020 income will be different?

On Aug 3, 2020 - the IRS issued a clarification that there will be no need to pay back all or some of the Stimulus payment if information reported on the 2020 return would make the taxpayer ineligible to qualify for the stimulus payment. 

Who will not receive stimulus checks?

  • Anyone without a social security number
  • Non-Resident Aliens
  • Households do not receive money for adult dependents, such as elderly relatives or adult children with disabilities.

How do I sign up?

You don't. There's no sign up. The payments will be automatic for those who qualify. You do not need to call the IRS.  See the special website the IRS created for coronavirus updates.

Is there a phone number to call?

In general, no. There are millions of Americans trying to contact the IRS and we expect it will be very difficult. However, on May 18th the IRS announced that they will add 3,500 telephone representatives to answer some of the most common questions about Economic Impact Payments.

The economic impact payment information line is 800-919-9835.

Will the stimulus money be taxed?

No. The stimulus money is not considered income.

How will I receive the money? Check or via electronic deposit?

If you have received a tax refund via direct deposit in the past, the IRS has your bank account information and once details are finalized, they are expected to direct deposit the payments, to those eligible, to their bank accounts. 

 
  • Direct deposit if the IRS has bank account information from prior refunds
    • New Tool introduced to provide information to update information if they do not (see flow-chart below). Note - the update bank information tool has since been closed.
  • Social Security recipients who are not required to file a return: IRS will use the information on the Form SSA-1099 or Form RRB-1099
  • The IRS will NOT be reviewing your FBAR or 8938 bank account information to find direct deposit information.
  • If not, check mailed to "last known address"
    • Some recipients will receive prepaid debit cards
    • It is not possible to request debit cards - the Bureau of the Fiscal Service (BFS) will determine which taxpayers will receive a debit card. 
    • There are currently mail outages from the United States to over 20 countries due to COVID
  • If you are below filing thresholds, complete the online IRS formNote - the Non-Filers tool has now been closed.
    • DO NOT USE THIS FORM if you plan on filing a 2019 return. It will prevent you from being able to e-file and you may be required to file an amended return.

If not, the IRS will mail a check to your "last known address". Some recipients will receive prepaid debit card known as "The Economic Impact Payment Card". If you receive an Economic Impact Payment Card, it will arrive in a plain envelope from “Money Network Cardholder Services.”  The front of the card will say Visa & the back will have the name of the issuing bank, Metabank. 

The Visa name will appear on the front of the Card; the back of the Card has the name of the issuing bank, MetaBank®, N.A. Information included with the Card will explain that the card is your Economic Impact Payment Card.  

If the IRS does not have your direct deposit information, see the flow-chart below to see if the Get Payment tool is right for you.

The fastest way to get updated information to the IRS would be to file your 20 return.

Reminder: Your refund should only be deposited directly into accounts that are in your own name, your spouse’s name or both if it’s a joint account. Trying to deposit a tax refund into a bank or financial account with a different name can be seen as a red flag for fraudulent activity

Unable to cash check abroad

The IRS has issued guidance that if you opted for a physical check and are unable to cash it, the payment will be credited back to your account, but cannot be reissued as a direct deposit. If the IRS receives your payment back, you would need to claim the recovery rebate credit when you file your 2020 tax return (in 2021), if eligible based on your 2020 filing. The IRS can only deposit to a U.S. affiliated bank account.

Note - please review our article on how to cash IRS checks abroad before returning the check to the IRS
 

To return the paper check:

  1. Write "Void" in the endorsement section on the back of the check.
  2. Mail the voided Treasury check immediately to the following address (if you live abroad):

    Austin Internal Revenue Service
    3651 S Interregional Hwy 35
    Austin, TX 78741
  3. Don't staple, bend, or paper clip the check.
  4. Include a brief explanation stating the reason for returning the check (unable to cash check abroad) 

Payment Issued but not received - request payment trace

First, if your payment was due to be a direct deposit, confirm that it was not received by your bank. 

If the Get My Payment tool says it was issued, but you have not received it and more than the specified number of days (list below) have elapsed, you may request a payment trace.

 Date thresholds for trace 
  1. 5 days since the scheduled deposit date
  2. 4 weeks since it was mailed by check to a standard address
  3. 6 weeks since it was mailed, and you have a forwarding address on file with the local post office
  4. 9 weeks since it was mailed, and you have a foreign address

Payment trace logistics

Which IRS tool is right for you?

Only the Get My Payment Tool is available in 2021. The below flow-chart is no longer in service.

How to navigate IRS Get My Payment tool

 

  IRS Tool Tips & Tricks 
  1. Many taxpayers with refunds apply those refunds to estimated taxes in future years. If you have done so, please put 0 for the amount of refund, not the actual overpayment amount that the IRS owes you.
  2. Do not put anything other than the street address in the address line. Do not add dashes, special characters. Taxpayers, especially outside of the U.S., often have many characters in their address. When using the IRS tool to locate yourself in the system, only use numbers & the street name.

When will I receive the money?

Press briefings have indicated 3 weeks if the IRS is able to do direct deposit. Paper checks will inevitably take longer, especially for those residing abroad.

After the payment is paid, the IRS will mail a letter to the taxpayer’s last known address within 15 days. The letter will provide information on how the payment was made and how to report any failure to receive the payment. If unsure if it is legitimate, please visit IRS.gov first.

The IRS just released a tool to check payment status (see flow chart above to see if it's for you). Importantly - if the IRS has your information on file, you cannot update the direct deposit info. Update: the direct deposit information can only be updated via filing the 2020 tax return. Get My Payment tool no longer offers the option to update bank details.

  • Check payment status
  • Confirm payment type: direct deposit or check
  • Enter bank account information for direct deposit if direct deposit information is not on file and payment has not yet been mailed.

COVID-19 Updates for Direct Loans

As of January 20, 2021, monthly payments are suspended for ED-owned federal student loans through September 30, 2021. You don’t have to make monthly payments before at least October 1, 2021.

What else you should know about?

  • Interest rate of 0% has been extended at least through September 30, 2021
  • An Administrative forbearance has been extended  at least through September 30, 2021, as well
  • There are no payments due for monthly billing statements and auto-debit
  • You will receive credit toward Public Service Loan Forgiveness (PSLF) if you work for a qualifying employer during the suspension period as though you made monthly payments on time.

If you have any questions please contact our team of experts.

Additional FAQ:

Is it better to estimate my 2019 taxes now (since I won't receive my XXX tax return until June), or should I file the extension, and let the stimulus check be based on my 2018 return?

We recommend to file an extension now and file your 2019 return as soon as you are ready. In the end, the final amount of money you receive will be clarified on your 2020 tax return (in 2021). But, if your 2018 return made you ineligible for a stimulus, and your 2019 return would make you eligible, you should file your 2019 return ASAP to get money now instead of spring 2021 (in the form of a refund on your 2020 return). Whilst filing of past due 2018 and 2019 returns is critical, eligibility for the Recovery Rebate Credit of non-filers will solely depend on their 2020 tax return income and family composition.

I've never had a refund (I've always paid tax) - will the stimulus check be sent to the address on my return?

Yes - the funds will be sent to the last known address. See above question When will I receive my money for information on the IRS tool to update direct deposit information.

Can someone still qualify if they are Married filing Separately?

 Yes, If you filed Married filing Separately, for the Stimulus check you will qualify as Single.

How can I get my address changed, or update my bank account or have my funds sent electronically to my bank account?


File your 2020 return as soon as possible.  

I have never filed my taxes since I moved from the US 3+ years ago and I need to receive the stimulus check, what do I do?


If you are not in the system, the IRS won't be able to determine if you are eligible.

To become current with your taxes, you can begin that process with the IRS amnesty program. You can read more about this program and sign up here: taxesforexpats.com/sp

I am not required to file a return & used the Non-Filer tool to provide information. I received the $1200/$2400 payment (couple), but did not receive $500 EIP for each child. What do I do?

If you used the Non-filers tool prior to May 17, 2020 - the IRS will automatically issue the additional $500 EIP per qualifying child to affected individuals in early August. Direct deposit payments are scheduled for August 5, 2020, and paper checks are scheduled to be mailed August 7, 2020. You can use Get My Payment to check the status of the $500 EIP per qualifying child, and you will receive another Notice 1444 in the mail letting you know the $500 EIP per qualifying child was issued. Keep this letter for your records.

If you used the Non-Filers tool on or after May 17, 2020, your EIP included $500 per qualifying child.

Do I still qualify if I am a US expat living abroad, but don't have to file a tax return because I receive only social security, or SSI (Supplemental Security Income to help aged, blind, and disabled people, who have little or no income)?


Yes, you qualify.  The IRS will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments to recipients of benefits reflected in the Form SSA-1099 or Form RRB-1099 who are not required to file a tax return and did not file a return for 2018 or 2019. This includes senior citizens, Social Security recipients and railroad retirees who are not otherwise required to file a tax return. 

The non-filer tool is no longer in service.

Ines Zemelman, EA
founder of Taxes for Expats