To respond to the COVID-19’s massive impact on the economy, on March 27 President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law. This bill offers tax relief and direct stimulus payment to U.S. individuals, even to the ones living abroad. This is why we wanted to make sure sure you know your rights and what to expect.
How much is the Stimulus Payment
The amount of the “check” is $1,200 for an individual and $2,400 for taxpayers filing jointly, with an additional $500 for each qualifying child.
This payment will only be made to individuals who have earned less than $99,000 in 2019. For joint tax filers the limit is $198,000. The amount will be reduced for individuals who earn more than $75,000 – $150,000 for joint filers.
If you haven’t yet filed your 2019 tax return, the IRS will use your information from 2018. If neither of them has been filed, the IRS urges you to do it as soon as possible.
Who is Eligible
As the US government believes any American can be affected, every U.S. citizen who has a U.S. social security number and who files U.S. taxes is eligible. Accordingly, even U.S. expats qualify.
That is basically all one needs to be eligible for this aid. This is a massive program with a very large reach.
How Will the Payment Happen
If you have already set up a direct deposit with the IRS, the money will simply be transferred to your bank account. The tax administration is also developing a web-based portal for individuals to provide their banking information, which will be available in the coming weeks.
Even if you do not provide any bank information, you will receive a check in your mailbox. Don’t forget to update your address with the IRS if needed.
The government would like to start this process immediately: Treasury Secretary Steven Mnuchin said “Americans need cash now. And the president wants to get cash now. And I mean now in the next two weeks.”
2020 Extended Filing Deadlines
The COVID-19 situation led to a change in the federal filing deadline for tax returns. The 2020 deadline has moved from April 15 to July 15. Also, there is no need to file any additional forms, the extension is automatic. Expats can submit Form 4868 to further extend their tax deadline to October 15th.
If you expect a refund, you should file early.
If you are required to file a State Tax Return, please visit AICPAs’ State Tax Filing Guidance. This document provides detailed information for each state’s tax deadline.
Other Situations Covered By The Law
The CARES Act also includes other provisions: for example special assistance to eligible businesses, a loan program for small businesses, or a special relief to the medical and hospital industries.
You can find more information directly on the IRS website, or by contacting us if you would like more insights about how all of this can relate to you.
