Financial Support for US Expats – $1,200 Stimulus Check

The US government has announced that all US expats will be eligible for stimulus payments of $1,200 per person to help with the financial effects of coronavirus.

The payments will be issued by direct deposit if the IRS has your bank and financial account details – or they will send out a paper check (anywhere worldwide).

How to qualify for the payment

The $1,200 is for each US citizen and Green Card holder, even if they are taxpayers residing outside of the US.

Your worldwide income, as shown on line 8b of the 2019 federal tax return, should be under $75,000 to receive the full $1,200.

If your income is $75,000 to $99,000, you will still receive a partial payment.

You will also be eligible for $500 per child – again even if they are living outside of the US.

As part of the claim you need to have filed your 2018 and 2019 US tax returns.

If you are behind on your US tax returns

Many US expats don’t realize they still need to file US tax returns once they leave the US, or they fall behind as they think they don’t owe any tax.

Even if you only have foreign income, you do still need to file US taxes after you move abroad – but you can claim the foreign earned income exclusion (form 2555) and foreign tax credit (form 1116) to stop the US and any double taxation.

If you haven’t filed a tax return since you left the US or for a few years, you can use the IRS amnesty and there will be no penalties – plus you can then be eligible for the stimulus payment.

The US voluntary disclosures – the streamlined filing compliance procedures or the streamlined foreign offshore procedures, requires that you just file the last 3 US tax returns – all returns that are outstanding before that are waived.

You will also need to file the separate FBARs (foreign bank account reporting) for 6 years – again there are no penalties if you use the amnesty, so it’s a good time to catch up and get your taxes in order.

There are reports online of the IRS streamlined offshore program closing in 2020, the IRS has not provided any guidance on this, so you should use the streamlined procedure while it is available and you can avoid any penalties.

Foreign bank account reporting

Each year US individuals (either in the US or abroad) are required to make a separate report to the federal tax return disclosing their foreign financial accounts. These are all bank, investment and pension accounts held outside the US that you have access to.

You report the highest balance on each account at any point during the year. The FBAR is filed online each year by the extended deadline of October 15.

To file an FBAR you use the BSA E Filing website, using the form FinCEN 114.

Expat taxes and US tax deadline

Finally there is additional relief for your federal income taxes for 2020 as the deadline to file and pay any taxes due has been extended to July 15, 2020.