Did you forget to claim a US stimulus check? It’s not too late!
Yes, that’s right - Americans living in Germany can still claim all three stimulus payments even if they have never filed a US tax return abroad. Nathalie Goldstein from MyExpatTaxes explains how to do this.
In March 2020, the CARES Act was passed and it provided stimulus payments to eligible individuals to help alleviate financial burdens caused by the COVID-19 pandemic. US citizens living abroad may also be eligible to receive these payments, but they may need to take an extra step to claim them.
It's important to note that eligibility for stimulus payments is based on several factors, including income, tax-filing status, and citizenship or residency status. If you meet the eligibility requirements, you can claim your payment regardless of whether you live in the US or in a foreign country.
1. Back taxes
You'll need to catch up – but don't panic. That doesn't mean 10 years of back tax returns. US citizens living abroad who have not received stimulus payments must file a tax return with the IRS to claim their share. If you already filed a tax return for 2019 or 2020, you should have automatically received your payment through direct deposit or a paper check, even if you live outside the US.
Even if it's been several years since you last filed your US taxes, you must only file the last three years' tax returns plus the current year to get your check. You'll also need to file up to six years of Foreign Bank Account Reports (if your situation requires it). Filing your three past tax returns and FBARs is part of a program called the Streamlined Procedure or Streamlining. The IRS created this program as amnesty for US citizens abroad to get caught up and compliant on US taxes.
Luckily, if you complete the Streamlined Procedure this year, you can also claim any eligible stimulus payments you may have missed.
2. Time limit for claiming payments
There is a ticking clock on stimulus payments and after that, it's gone. The IRS allows all US citizens to claim past tax refunds that they have missed for a maximum of three tax years. This means you have three tax years to claim your cash, whether it is in the form of stimulus payments or some other form of deduction.
Once the clock runs out, there is no getting it back. This time limit is why it is recommended for US citizens to file as soon as possible, to be sure they don't miss out on the maximum possible refund.
3. The Additional Child Tax Credit
Like the stimulus payments, parents may also find they can claim past child tax credit payments. Most Americans outside the US are eligible for around 1.400 US dollars per qualifying dependent under the age of 17 per year. If you have multiple children under that age, you could see a very nice deposit in your bank account!
The exact amount will vary depending on your tax situation and the specific tax year. For example, in 2022, the maximum age limit was raised to 18. In 2023, it is back down to 17, but the total maximum refund has increased to 1.500 US dollars.
4. Get paid interest from the IRS
Yes! The IRS will even pay you interest. If they owe you money, even if it's your fault because you did not file your taxes, you will get your refund with interest. It might only be fair since the IRS is also happy to charge you interest on taxes owed!
5. You probably won't owe any US taxes
Once most expats living abroad learn about their obligation to continue to file US taxes, many fear they will face a big tax bill. This fear keeps them from filing even when they could see a refund!
The truth is, there is very little to fear as the Streamlined Procedure comes without any additional late filing or payment fees. Plus, if you are like most Americans abroad, you won't actually need to pay US taxes. Between the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credits (FTC), most expats see their tax burden reduced to zero. This is great news because every eligible refund gets added on from here. You could claim all three stimulus payments, child tax credits, and any other refunds that you may be eligible for.
Work with a tax professional
While filing the Streamlined Procedure yourself is not particularly difficult, it is recommended to work with a tax professional. Whomever you choose, make sure it is someone who knows the ins and outs of filing US taxes abroad and can maximize your return so you can see your refund as soon as possible.
Overall, US citizens living abroad may be eligible to claim stimulus payments and related tax credits, but they may need to take additional steps. MyExpatTaxes helps their American clients by giving them the right guidance and support. They ensure that you receive the financial assistance you need.