Coronavirus & U.S. Expat Taxes in 2020/2021
Coronavirus turned our world upside-down, and the effects will last long past the end of 2020. As a result, your 2020 U.S. expat taxes will be a little different than years past because of all the COVID-19 programs, relief options, and requirement waivers for certain tax benefits.
Trying to understand how the Coronavirus affects your 2020 expat taxes is a tough order for even seasoned expats, so you probably have a few questions you need cleared up. Below we’ve outlined some major changes you should know about in order to reduce the stress of the 2021 tax season.
Ready to file your 2020 expat taxes? We can help.
How Coronavirus travel restrictions affect your U.S. expat taxes
If you’re an expat whose time abroad was disrupted by Coronavirus, you still may qualify to claim the Foreign Earned Income Exclusion and housing exclusion when you file your 2020 taxes in 2021.
Normally, you’d have to pass either the Bona Fide Residency Test or the Physical Presence Test in order to claim the FEIE. However, if you failed to qualify due to travel restrictions from Coronavirus, you’re in luck — the IRS waived the time requirements for the FEIE and foreign housing exclusion.
You qualify for the FEIE COVID-19 relief if:
- You were required to leave China, Hong Kong, or Macau between December 1, 2019, and July 15, 2020, or
- You were living abroad in another country and were required to leave between February 1, 2020, and July 15, 2020
Most U.S. expats qualified for both rounds of the Coronavirus stimulus checks
To provide relief to U.S. citizens affected by Coronavirus, the U.S. government passed two pieces of stimulus legislation — the CARES Act (which included the first stimulus payment) and a round of second relief benefits, including a second stimulus check.
The first round of stimulus payments included up to a $1,200 payment to each qualified individual as well as up to $500 for each child. They were rolled out over the summer of 2020, and as of December 1, 2020, most Americans had already received their first stimulus check. If you got an IRS letter, “Notice 1444 Your Economic Impact Payment,” save it — you’ll need the amount of the payment in the letter when you file your expat taxes in 2021.
The second round of stimulus payments includes up to a $600 payment to each qualified individual and $600 per child, based on your adjusted gross income. For expats to qualify for the full second stimulus check, you must have $75,000 or less in income if you file as single, $112,500 or less if you file as head of household), or $150,000 or less if you file jointly with your spouse or as a qualifying widow(er). You’ll also then qualify for a $600 payment per qualifying child. So, if you filed jointly with your spouse, have two children under age 17, and earn under the income threshold, you’re theoretically eligible for up to $2,400.
You can estimate your own payment amount with H&R Block's CARES Act Stimulus Check Calculator .
Eligibility for the stimulus check has been a big topic of discussion and the source of much confusion. If you are a U.S. citizen with a Social Security number, cannot be claimed as a dependent by someone else, and you fall within the income brackets, you qualify for the stimulus checks.
If you do not normally file a tax return and do not receive Social Security benefits, railroad benefits, Supplemental Security Income (SSI) benefits, or veteran’s benefits through the government, you may need to take action and file a 2020 tax return to get your payment.
If you’re a U.S. expat and still haven’t received your stimulus checks:
If you’re supposed to get a second round of stimulus payments but haven’t yet:
- If you’re eligible, be patient — the IRS announced that most direct deposit payments will be available on Jan. 4. Some people may see the pending deposit before then. Most people will get a direct deposit. If not, your stimulus check should be mailed by the end of January. If you don’t receive it as a direct deposit now or check/debit card mailed in January, you need to claim it on your 2020 return. You can check the status of your payment with the IRS’ “Get My Payment” tool.
If you were supposed to get the first stimulus check last summer and you didn’t, there may be a few reasons why:
- You weren’t eligible to receive one
- You didn’t have a U.S. bank on file for direct deposit*
- You had the wrong bank account on file
- You’ve moved to a different address than the one on file with the IRS
- You actually already received it but accidentally lost or destroyed it.*We are looking into what you should do if you didn’t receive the first payment because it was lost in the mail and will update this section as soon as it’s clarified.
- You owe child support. If you’re overdue on child support payments, the IRS said it would deduct them from your stimulus check amount
Missing first stimulus payment? You still may be able to claim the Recovery Rebate Credit
You may still be able to receive a 2020 tax credit (known as a Recovery Rebate Credit) for the first stimulus payment if you did not receive the correct amount or only received a partial amount of what you qualified for. For example, if you have a non-resident alien spouse with no Social Security Number or if you didn’t receive a child payment, you can still rectify the situation and claim the credit when you file your 2020 Form 1040 or 1040-SR.
If you got an IRS letter, “Notice 1444 Your Economic Impact Payment,” save it — you’ll need the amount of the payment in the letter when you file your expat taxes in 2021.
Visit the IRS economic impact payment FAQ for additional details.
The IRS extended last year’s expat tax deadlines
Normally, taxes for U.S. expats are due on April 15 of the following year, with an automatic extension to June 15. FBARs are due at the same time as your U.S. tax return, but the Treasury automatically files extensions for all filers so you have until October 15 to file without penalties.
Due to the pandemic, the IRS extended last year’s general and expat tax deadlines to July 15, 2020.
If you didn’t file your tax return by the July 15 deadline, you were able to file IRS Form 4868 to extend the deadline to October 15. If you should have submitted IRS Form 4868 to extend your tax deadline and forgot, you need to file your expat taxes quickly to minimize tax fines and repercussions.
Many expats choose to file on the October deadline so they can file their resident country taxes (like expat taxes in the U.K.) and their U.S. taxes at the same time. Because of Coronavirus, you could have requested an additional two-month extension to submit your taxes on December 15 if you still needed more time to file after October 15.
You qualified for the Coronavirus tax return deadline extension in 2020 if you were one of the following types of filers:
- Individual Form 1040 filers
- Corporations filing Form 1120
- Trusts and estates filing Form 1041
- Fiscal year partnerships, associations and companies with due dates on April 15, 2020 (uncommon)
Need help navigating Coronavirus tax implications for U.S. citizens abroad? Ready to start your 2020 U.S. expat taxes? H&R Block is here to help.
The year 2020 has been full of pivots, tax changes, and uncertainty, and that’s why the experts here at H&R Block have been working tirelessly to make sure we’re ready to help with your specific tax situation. There’s a lot to digest, so if you’re confused about your COVID-19 tax situation, let us help.
Ready to file? Whether you file expat taxes yourself with our online DIY expat tax service designed specifically for U.S. citizens abroad or file with an advisor, H&R Block is here to help. Head on over to our Ways to File page to choose your journey and get started.