There is some confusion from nonresidents in the US around the topic of stimulus payments from the pandemic.
Nonresidents are typically not eligible to receive these payments. However, the IRS sent many checks to nonresidents in error.
The IRS has recently announced that people who are missing a stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2020 or 2021 federal tax return.
In this guide we will cover everything a nonresident needs to know about the Recovery Rebate Credit.
Here’s what you should know about the US Recovery Rebate Credit as a nonresident.
What is the US Recovery Rebate Credit?
The Recovery Rebate Credit was a payment that was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that came into existence in the early days of the pandemic, in 2020.
This initial part of this stimulus payment was of up to $1,200 for any of the qualifying adults and up to $500 per qualifying dependent.
A lot of these payments were sent out in mid-2020.
How much is the credit?
For the majority of people, the base amount received from the credit was $1,400.
For married couples who filed a joint tax return, the total was $2,800.
The amount received is generally based on factors such as
- Filing status
- Amount of children who can qualify
- Adjusted amount of any impact payments already received
- Gross income
Can a nonresident claim the Recovery Rebate Credit?
At the time of the payments, there was confusion around the qualifying factors as many nonresidents and residents alike received it.
However, strictly speaking, nonresidents (including nonresident international students) do not qualify for any of the credit, as you:
- Must be a US citizen or U.S. resident alien in 2020
- Cannot have been a dependent of another taxpayer in 2020
- Must have a Social Security number that is valid for employment before the 2020 tax return due date
I filed as a resident and Recovery Rebate Credit in error, what should I do?
The first point to remember is that you shouldn’t worry, you are not alone in receiving this in error!
The good news is that all you need to do is file an amended tax return for the relevant year you filed as a resident and thus pay any tax liability that you owe to the IRS.
Thousands of amended returns are sent to the IRS each year, this is completely normal and happens to many nonresidents. An amended nonresident tax form is formally known as 1040X.
Completing a 1040X online is quite easy, and you can do it today with Sprintax!
I filed correctly but received the payment. What should I do?
This is another common scenario we have seen over the past year.
Most people find they have either cashed the check or have not cashed it, so will be left with two options:
1. You received the check but have not yet cashed it:
- You’ll need to write “Void” on the back of the check.
- Mail the check to a valid IRS branch location closest to you.
- Include in it a note outlining why you are returning the check.
2. You received the payment as a check and cashed it/ you received the payment through direct deposit:
- This will require you to send a personal check, or money order, etc., to your relevant IRS branch location.
- On the check/money order, you’ll have to write “made payable to ‘U.S. Treasury’” and also write ‘2020EIP’, and your taxpayer ID (in this case your social security number, or individual taxpayer identification number/ITIN).
- Again, give an explanation of the reason for returning the payment.
How Sprintax can help you
Sprintax is the go-to service for nonresident and international student tax preparation in the US.
If you accidentally claimed the recovery rebate credit, we can help you prepare your 1040X to ensure you are on the right side of the tax authorities.
If you are unsure of your tax obligations, our tax team is more than happy to discuss your case with you.
We have a 24/7 Live Chat service that will provide you with key assistance when you need it the most.
We’ll complete a full tax review on our user-friendly system, ensuring you are ready to file your optimized tax return.
Prepare your 1040X form with Sprintax Returns.
