• The July 15 extension deadline was expanded to include everyone, including Americans who live and work abroad, and allows them to postpone both their 2019 Federal Tax Return filing and the payment of the 2019 tax due.
  • Information returns, which had specifically been excluded from the postponement in the prior notice, have now also been extended to July 15, including Form 3520, 8938, 8858, 8865, 8621, 5471 and 5472.
  • Relief is also extended to tax payments normally due on June 15, now also due by July 15 2020. This means that 2019 US tax balances and the first and second 2020 Estimated Income Tax Payments by individuals are all now due on July 15. If at all possible, it’s a good idea to start saving now for these payments. Having to make three tax payments at once would be a challenge in any normal year, so I expect it to be a much greater challenge in a year of great economic disruption.
  • No late-filing penalty, late-payment penalty or interest will be due if the tax payments mentioned above are made by July 15.
  • Taxpayers who need additional time to prepare their tax returns can request an extension to file by October 15th, but full payment is required by July 15 to avoid interest and penalties.
  • The deadline to claim a refund for 2016 tax returns, which would otherwise expire on April 15, 2020, has also been extended to July 15 2020.
  • IRS Taxpayer Assistance Centers are closed, and telephone service is not available, due to the COVID-19 National Emergency. The IRS website is the best resource for assistance until the federal emergency is lifted and the IRS resumes normal operations
  • Paper return processing and responding to IRS correspondence have also been suspended until further notice. Since most IRS centers are closed, anything mailed to the IRS may be returned to sender if there is no one on premise at the IRS center to accept the mailing. If this happens, do not panic. Save the returned envelope and mail it back once the IRS resumes normal operations.
  • The IRS is still processing electronic tax returns, issuing direct deposit refunds and accepting electronic payments.
  • Taxpayers who had received correspondence from the IRS about suspicious tax returns may be able to use the IRS’s online Identity Verification Service until normal operations resume and the IRS is able to take identity verification phone calls.
  • Most IRS tax and penalty collection activities have been suspended since March 25. More information about the state of collection activity is available through the IRS website.

New IRS Tool to help non-filers register for Economic Impact Payments

  • Low income US citizens and green card holders who are not a dependent of another taxpayer and do not have a tax return filing requirement are eligible for Economic Impact Payments.
  • A new tool found on the IRS website allows these individuals to provide basic information needed in order for the IRS to send them these payments.
  • This information includes name, address, Social Security Number and dependents information. Bank information can also be entered to receive the payment by direct deposit.
  • Individuals who are not required to file a tax return but receive Social Security retirement or disability payments or Railroad Retirement benefits, do not need to use this tool. They will automatically receive their Economic Impact Payment debited to the account that receives their social security benefits without need for any action.
  •  This tool is not available to non-filers who had a filing requirement but failed to comply with it. It is only available to those with gross income below the filing threshold.
  • How do you determine if your gross income is below the filing threshold? The relevant filing 2019 thresholds are:
    • $12,200 for single filers under 65
    • $13,850 for single filers over 65
    • $24,400 for joint filers with both spouses under 65
    • $25,700 for joint filers with one spouse over 65
    • $27,000 for joint filers with both spouses over 65
    • $5 for married filing separate filers, regardless of age. Yes, just $5!!! – this negatively impacts US taxpayers living overseas married to foreign nationals who do not choose to file as US residents.
    • $18,350 for heads of household under age 65
    • $20,000 for heads of household over age 65
    • $24,400 for qualifying widow(er)s under 65
    • $25,700 for qualifying widow(er)s over 65
    • $400 of net earnings for self-employed individuals who would otherwise have one of the higher thresholds listed above.
  • Gross income means income before any deductions. For example, gross income from rental activity, is the gross rents received, not the profit from the rental activity after deducting eligible rental expenses. The same concept applies to income from farming and self-employment. The gross amount of revenue before any deductions determines the requirement to file a tax return.
  • For US citizens and green card holders living abroad, although income excluded from US taxation under the Foreign Earned Income Exclusion is not counted towards the income thresholds to qualify for the Economic Impact Payment, it is counted towards the gross income threshold to determine if a tax return required to be filed.

I am curious about the ability to use this tool for Americans living abroad who do not need to file a tax return. Many online tools available through the IRS website cannot be used by foreign resident US taxpayers, and I’m afraid there is a chance that Americans abroad may not be able to use this tool either. Please let me know if you try to use this tool and you have trouble due to your foreign address.

Get My Payment – New IRS Tool to help recipients track the status of their EIP

  • The IRS is building a second new tool, Get My Payment, expected to be available by April 17.
  • Similarly to Where’s My Refund, this tool will allow taxpayers to check the status of their Economic Impact Payment: the expected date of payment and the form of payment (direct debit or check).
  • For taxpayers whose Economic Impact Payment is not scheduled before the tool is launched on April 17, the site will allow them to choose to receive the payment by direct debit and provide their bank information.
  • Although this has not been specified, generally, the IRS is unable to make deposits into foreign bank accounts. US taxpayers without a US bank account should therefore expect to be issued their Economic Impact Payment by check.
  • The IRS started scheduling Economic Impact Payments on April 9. If the IRS did not have the taxpayer’s bank information prior to scheduling the payment by check, the taxpayer will unfortunately not have the option to request a direct deposit. On the bright side, they should receive their payment before most anyone else!
  • The IRS is expected to issue over 100 million Economic Impact Payments to US citizens and green card holders living in the USA and abroad. With a maximum estimated capacity to issue 5 million payments per week, this task may take the IRS 20 weeks or more to complete.

Patience is a virtue, and this virtue is likely to be heavily tested by the IRS in 2020.

If you become frustrated with the IRS about the status of your Economic Impact Payment, the usefulness of the new tools available through their website, the responsiveness or lack of it with regards to your tax issues; please consider the enormity of the task that they have been assigned, with no additional budget and in the most challenging of the environments. With a Service that was stretched to the limits before this pandemic, this additional responsibility puts them in an almost impossible situation.

I’ve had my share of frustrations with the IRS, and I’m not exactly a fan, to put it mildly, of many aspects of their operations, but with respect to this situation, I am sympathetic and relieved not to be in their shoes. Please be prepared to exercise your patience muscles as you navigate the 2019 and 2020 tax seasons. It’s not looking to be smooth sailing.

If you live abroad and are unable to use the Get My Payment tool, or any other online tools, or face other extraordinary challenges, please let us know by writing to marina@crossborderplanner.com or matias@crossborderplanner.com.

Until the next post!


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