Beyond Borders: Unpacking Stimulus Checks for Americans Abroad

The COVID-19 pandemic brought unprecedented challenges, and governments worldwide responded with various forms of economic relief. In the United States, a cornerstone of this response was the Economic Impact Payment (EIP), more commonly known as the stimulus check. For millions of Americans living within the U.S., these payments offered a crucial lifeline. But for the vast community of U.S. citizens residing abroad – estimated to be over 9 million individuals – questions quickly arose: Were we eligible? How would we receive it? And what were the unique hurdles associated with being a U.S. taxpayer living outside the homeland?

This comprehensive guide delves into the nuances of stimulus checks for Americans living abroad, clarifying eligibility, payment mechanisms, common challenges, and crucial steps to ensure you received, or could still claim, your rightful payment.

Understanding the Basics: What Were the Stimulus Checks?

Before diving into the specifics for expats, it’s essential to understand what the stimulus checks fundamentally were. The U.S. Congress authorized several rounds of Economic Impact Payments (EIPs) in response to the pandemic:

• EIP 1 (CARES Act, 2020): Up to $1,200 per eligible individual, plus $500 per qualifying child.
• EIP 2 (CAA, 2020): Up to $600 per eligible individual, plus $600 per qualifying child.
• EIP 3 (American Rescue Plan, 2021): Up to $1,400 per eligible individual, plus $1,400 per qualifying dependent.

Crucially, these payments were advance payments of a refundable tax credit called the Recovery Rebate Credit (RRC). This distinction is vital because if you didn’t receive an advance payment (the EIP), you could still claim the RRC when you filed your federal income tax return for the relevant year (2020 for EIPs 1 & 2, and 2021 for EIP 3).

Who Was Eligible? The Core Criteria

The good news for Americans abroad is that living outside the United States did not automatically disqualify you from receiving a stimulus check. The primary eligibility criteria were largely the same for all U.S. citizens and qualifying resident aliens, regardless of their physical location:

1. Valid Social Security Number (SSN): You, your spouse (if filing jointly), and any qualifying children/dependents needed a valid SSN issued before a specific date.
2. Not a Dependent: You could not be claimed as a dependent on another taxpayer’s return.
3. Adjusted Gross Income (AGI) Thresholds: Your income had to be below certain levels. Payments phased out above these thresholds:
   • EIP 1: Phased out for single filers with AGI over $75,000 ($150,000 for married filing jointly).
   • EIP 2: Phased out for single filers with AGI over $75,000 ($150,000 for married filing jointly).
   • EIP 3: Phased out for single filers with AGI over $75,000 ($150,000 for married filing jointly), with a steeper phase-out range than previous rounds.
4. U.S. Citizen or Resident Alien: This is where Americans abroad fit in. As U.S. citizens, they generally met this fundamental requirement.

Important Note on AGI for Expats: Many U.S. citizens abroad utilize tax benefits like the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC) to reduce or eliminate their U.S. tax liability. For stimulus check eligibility, the IRS generally used your Adjusted Gross Income (AGI) before applying the FEIE or FTC. This meant that even if your taxable income was zero after exclusions, your AGI might still be high enough to exceed the stimulus payment thresholds. However, if your AGI before exclusions was within the qualifying range, you were eligible.

The Expat Conundrum: Dispelling Myths and Clarifying Realities

While the basic eligibility rules applied, several unique aspects and common misconceptions arose for the expat community:

• Myth: "I don’t pay U.S. taxes, so I’m not eligible."

  • Reality: This is a common misunderstanding. All U.S. citizens are generally required to file U.S. tax returns annually, regardless of where they live or if they owe any tax, provided their income exceeds the filing threshold. Eligibility for stimulus checks was primarily based on filing a U.S. tax return and meeting the AGI and SSN criteria. Even if you owed $0 in U.S. taxes due to the FEIE or FTC, you were still required to file, and that filing was key to the IRS knowing you existed and were potentially eligible.

• Myth: "The IRS only has my foreign address, so they can’t send me money."

  • Reality: The IRS does send mail and payments to foreign addresses. The challenge was often the method of payment and the reliability of international mail.

• Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) Interaction:

  • As mentioned, your AGI for stimulus eligibility was generally calculated before applying the FEIE or FTC. This meant some high-earning expats who paid no U.S. taxes might still have been above the income threshold for the payments. Conversely, many expats with moderate incomes, even if excluded by FEIE, still qualified based on their AGI before the exclusion.

• The "Substantial Presence Test" and "Bona Fide Residence Test":

  • These tests are used by the IRS to determine if a non-U.S. citizen is considered a U.S. resident for tax purposes. They are generally not relevant for U.S. citizens living abroad. As a U.S. citizen, you are subject to U.S. taxation on your worldwide income regardless of where you reside, and these tests do not impact your stimulus check eligibility.

The Payment Mechanism: Getting Money Abroad

This was often the most significant hurdle for expats. The IRS primarily attempted to disburse payments via:

1. Direct Deposit: If the IRS had up-to-date U.S. bank account information from a recent tax return, they would attempt direct deposit. This was the most efficient method.

   • Challenges for Expats: Many Americans abroad do not maintain U.S. bank accounts, or their accounts may have become dormant. The IRS’s system was generally not equipped to directly deposit into foreign bank accounts, which use different routing and account number structures.

2. Physical Check: If direct deposit failed or no U.S. bank information was available, the IRS would mail a paper check to the last known address on file.

   • Challenges for Expats:
     • International Mail Delays: Mail from the U.S. to foreign countries can take weeks or even months, and is prone to getting lost.
     • Outdated Addresses: If an expat moved frequently or hadn’t updated their address with the IRS, the check would be sent to an old address.
     • Cashing Foreign Checks: Many foreign banks charge high fees or refuse to cash checks issued from U.S. Treasury, particularly if the amount is small. This was a significant practical barrier.

The Critical Link: Filing Your US Taxes

For many Americans abroad, the key to receiving their stimulus payment was filing their federal income tax return.

• Automatic Payments (Early Rounds): In the initial rounds, the IRS used information from 2018 or 2019 tax returns to determine eligibility and send payments automatically. If you hadn’t filed in those years, or if your information was outdated, you likely missed the automatic payment.
• The Non-Filer Tool: For a period, the IRS offered an online tool specifically for non-filers to provide their information to receive the stimulus payment. While this tool was beneficial, many expats were unaware of it or had difficulty using it due to technical issues or lack of specific instructions for foreign addresses/phone numbers.
• Claiming the Recovery Rebate Credit (RRC): This was (and remains) the most reliable pathway for expats who did not receive their advance payments. The RRC was claimed on Form 1040, Line 30 for both the 2020 and 2021 tax years. By filing your return and accurately calculating your RRC, the credit would be added to your refund (or reduce any tax owed). This meant that even if you didn’t owe any U.S. tax, you could still receive a refund equal to your stimulus payment by claiming the RRC.

Common Hurdles and Solutions for Expats

1. "I Never Got My Check!"

   • Reason: Most commonly, the IRS didn’t have current U.S. bank information, or your address was outdated, or you didn’t file a tax return that year.
   • Solution: The primary solution is to file (or amend) your 2020 and/or 2021 tax returns and claim the Recovery Rebate Credit. The IRS "Get My Payment" tool is no longer active for checking past EIPs.

2. Banking Issues for Direct Deposit:

   • Reason: The IRS could only direct deposit into U.S. bank accounts. Foreign bank accounts were not compatible.
   • Solution: If you maintain a U.S. bank account, ensure it’s up-to-date with the IRS. Otherwise, the payment would have been sent as a check, or you’d need to claim the RRC on your tax return, which would be deposited into your U.S. account if you provided one for your refund.

3. Mail Delays and Lost Checks:

   • Reason: International mail is inherently less reliable than domestic.
   • Solution: If a check was lost, you would typically need to request a trace from the IRS. However, the most effective solution in hindsight was to claim the RRC on your tax return, which would then be directly deposited (if you had a U.S. account) or sent as a more easily traceable refund.

4. Dependents Abroad:

   • Reason: Some expats were unsure if their children living abroad qualified for dependent payments.
   • Solution: As long as the dependent met the IRS’s general qualifying child/dependent criteria (age, relationship, support, residency) and had a valid SSN (or ITIN for some dependents in the final round), they qualified for the additional payment.

5. Not Filing U.S. Taxes Regularly:

   • Reason: Many expats mistakenly believe they don’t need to file if their income is below the FEIE or if they don’t owe U.S. tax.
   • Solution: This is the most critical takeaway. Always file your U.S. tax return annually. It keeps you in the IRS system, allows them to have your most current address and banking information, and ensures you can claim credits like the RRC or future benefits.

6. Dual Nationals:

   • Reason: Uncertainty about how dual nationality affects eligibility.
   • Solution: If you are a U.S. citizen, regardless of any other citizenships you hold, you are subject to U.S. tax laws and were eligible for stimulus checks if you met the other criteria.

How to Claim or Rectify Your Stimulus Payment

If you are a U.S. citizen living abroad and believe you were eligible but did not receive your stimulus checks, here’s how you could have claimed them:

1. File Your 2020 Tax Return (if you haven’t already): This was the pathway to claim EIP 1 and EIP 2 as the Recovery Rebate Credit. Even if you owed no tax, filing allowed you to receive the credit as a refund.
2. File Your 2021 Tax Return (if you haven’t already): This was the pathway to claim EIP 3 as the Recovery Rebate Credit.
3. Amend Your Tax Return (Form 1040-X): If you already filed your 2020 or 2021 return but did not claim the Recovery Rebate Credit you were entitled to, you could file an amended return.
4. Professional Tax Advice: For complex situations, or if you’re unsure how to navigate U.S. tax forms from abroad, it is highly recommended to consult with a tax preparer specializing in U.S. expat taxation. They can help you determine eligibility, file correctly, and resolve any issues with the IRS.

Looking Ahead: Lessons Learned for Expats

The stimulus check experience offered several crucial lessons for the American expat community regarding their U.S. tax obligations and interactions with the IRS:

• Maintain Current Information with the IRS: Always ensure the IRS has your most current mailing address and, if applicable, your U.S. bank account details. This is vital for receiving any future refunds, communications, or potential benefits.
• File Your U.S. Tax Returns Annually: Even if you believe your income is fully excluded by the FEIE or offset by the FTC and you owe no U.S. tax, filing your annual return (Form 1040) is essential. It establishes your filing history, keeps you in the system, and ensures you can claim any refundable credits or benefits you’re entitled to.
• Understand Your AGI: Be aware of how your Adjusted Gross Income is calculated, especially before exclusions, as it’s often the basis for eligibility for various tax benefits and credits.
• Seek Specialized Help: U.S. tax laws for expats are complex. Don’t hesitate to engage with tax professionals who specialize in international taxation. They can save you time, stress, and ensure compliance.

In conclusion, while the path to receiving stimulus checks was often more convoluted for Americans living abroad, the intent was clear: to provide economic relief to eligible U.S. citizens, regardless of their current residence. By understanding the rules, diligently filing tax returns, and addressing the unique challenges of international living, many expats successfully navigated the process and received their rightful payments. For those who still haven’t, the Recovery Rebate Credit remains a viable avenue, underscoring the enduring importance of fulfilling your U.S. tax filing obligations, even from afar.