Stimulus Update: One More Surprising Group Due Stimulus Money
An entire group of Americans could be missing out on money they're due.
- Stimulus checks were intended to help Americans get through the global pandemic.
- No matter where an American lives, they are still eligible to receive stimulus payments.
The first three rounds of stimulus checks were intended to accomplish at least two goals:
- Help Americans hard hit by COVID get through the financial hardships of a global pandemic
- Infuse cash into American businesses, thereby lifting the entire economy
However, the primary goal was the first one listed here -- to shore up household finances during a time of mass unemployment and economic uncertainty.
It just so happens that approximately 9 million Americans are living outside the U.S. While U.S. citizens living abroad were not eligible for pandemic-related programs like enhanced unemployment benefits (even if they were working remotely for a U.S.-based company), they are eligible for Economic Impact Payments and the enhanced Child Tax Credit money.
It could be a windfall
Americans living abroad may not realize that they qualify for stimulus funds. If that's the case, they may be in for a windfall when they file their 2021 tax returns. That's because individuals with an adjusted gross income (AGI) of up to $75,000, head of households with an AGI of up to $112,500, and couples with an AGI up to $150,000 are eligible for stimulus payments. How much those payments will be will depend on the number of eligible families members and total AGI.
Although the IRS has issued more than 3.7 million payments to Americans living outside the U.S., it represents less than 1% of total stimulus payments deposited into bank accounts.
Still U.S. citizens
From military members stationed outside the U.S. to retired Americans living in inexpensive countries with affordable healthcare, there are many reasons to live outside the country. Still, U.S. citizens who live abroad are required to file a U.S. tax return. And just as though they lived in the U.S., they must report any earned income. While it's true that they could qualify for tax breaks on some foreign income, they must still pay their fair share of U.S. taxes.
For those who do not realize they were eligible for stimulus funds, there's another chance to claim their 2021 share when they file their 2021 tax return. To receive the two payments missed in 2020, they can file an amended 2020 tax return. It's important to file an amended return as soon as possible as they must generally be filed within three years of the date the original return was filed, or within two years of the date taxes were paid, whichever is later.
Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, explained the policy of sending money to Americans residing outside the country. "If assistance to struggling families is the intended goal, then whether U.S. citizens live here or abroad is not an important distinction during a worldwide pandemic."
Chances are there will not be a fourth stimulus payment, despite the fact economists see further assistance as a necessity for some Americans. That means that more Americans may end up tightening their financial belts until the economy (and their personal budgets) have fully recovered. Budget tightening may include:
- A call to service providers to ask about discounts or the availability of level payment plans.
- Work with a non-profit credit counseling service to negotiate bills in collections, build a workable monthly budget, and pay off debt.
- Find out if lenders will extend hardship programs.
- Pick up a side gig to supplement income.
Most of all, it's essential never to give up. As tough as things appear today, tomorrow is likely to have something better in store. For Americans living abroad who have yet to claim their stimulus payments, help may be just around the corner.
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