Close to a year ago, when the first coronavirus stimulus law was passed, the CARES Act, we received lots of messages from Americans living abroad with a big problem: they didn’t know how to cash their IRS check abroad.
Fast forward to this week, and the IRS is getting ready to start distributing the THIRD Economic Impact Payment stimulus checks to individuals. We will call this third payment EIP3 for short.
EIP3 are larger payments than the first two. $1,400 per individual, including dependents without age limitation. There are income phaseout limitations, though. For single households, the checks begin to phase out at $75,000 of AGI and completely phase out at $80,000. For married households, the phaseout is between $150,000 and $160,000.
Want to know if you qualify? Use this calculator to find out:
Back in April 2020 we recommended that every American overseas with a US bank account provide their bank account information to the IRS via a tool that the IRS had set up for this purpose. The safest and fastest way to receive the EIP checks is by direct bank deposit.
And many of you did.
This tool was closed in May 2020 and is no longer available. So that’s not an option we have this time around.
If you received your EIP1 or EIP2 by direct bank deposit, the IRS will send you the next stimulus EIP3 by direct deposit also.
If you received a check mailed by the IRS before, the IRS will likely send your EIP3 to you by check again, UNLESS YOU PROVIDED YOUR BANK ACCOUNT INFORMATION TO THE IRS WHEN YOU FILED YOUR 2019 OR 2020 US TAX RETURN.
What options do you have in you haven’t provided your US bank account information to the IRS or if you do not have a US bank account at all?
Let’s start with what to do if you have a US bank account:
- Option 1: With US accounts, in most cases you should be able to use your bank’s mobile deposit app to deposit the check. Sometimes US mobile deposit apps don’t work abroad. If your mobile deposit app doesn’t work where you live, try using a VPN to access the app from a US server. Sometimes this does the trick. There are many different companies providing VPN apps that could help you overcome US mobile bank app restrictions in your country of residence.
- Option 2: If you are not able to download or access your bank’s mobile app from overseas, you should be able to mail the check to your bank in the USA for deposit. Call your bank to find out where and how to mail the check. It can be a bit costly and slow to go this route, and not every country’s postal service is reliable. You may be able to use a private courier service like DHL or Fedex is you don’t feel you can rely on the postal service.
- POTENTIAL HACK – Option 3: Do you have family or friends in the USA that you can trust with your life? If that’s the case, you may be able to ask them to do this huge favor to you: to download your bank’s app and deposit the check on your behalf. How can this be done when the physical check is in your possession? By text, email or a direct message app. You can take a photo of the front and back of the EIP3 check with your phone and send the photos to your trusted US resident person. They can use those photos to deposit the check in your account using your mobile app in the USA. Immediately after the check is successfully deposited, you should change your bank login credentials to prevent accidental access to your bank information by unfriendly third parties. Big warning here: only use this hack with someone you trust 100%. Providing your bank account login information to a third party, even if briefly, could be disastrous if the person is not trustworthy! Proceed with extreme caution.
- Option 4: Traveling to the USA this summer? If you do not have an urgent need for the funds and have plans to travel to the USA in the near future, you can deposit the check during your visit. EIP3 checks are Department of the Treasury checks and they are valid for a year from the date of issue.
What if you don’t have a US bank account?
You may be able to open a US account from abroad:
- The State Department Federal Credit Union (SDFCU) allows opening US bank accounts for Americans overseas who are members of the organization American Citizens Abroad. The SDFCU app cannot be downloaded abroad, though, so if you go this route, you will need to use option 2, 3 or 4 listed above to deposit your check.
- Some US investment firms like Charles Schwab, allow opening accounts from many foreign countries. Schwab’s mobile app can be downloaded and used in some of those foreign countries to deposit checks, which is very convenient. If Schwab does not allow you to open an account in your country of residence due to regulatory restrictions, you may be able to open an account with another US brokerage firm. This varies from country to country, so you will need to research the restrictions that apply to you.
What if you live abroad and you do not want or cannot open a US account?
If you live in Switzerland:
- If you have a UBS US dollar account, you can deposit the check for a $30 fee. If you have a UBS Swiss Franc account, you will also incur foreign transaction fees when you deposit the US dollar denominated check. Make sure to find what those costs are before making the deposit.
- If you have a Credit Suisse account, you can deposit the check, but you will need to pay a CHF20 check deposit fee, plus 2.5% of the first CHF 1,000 and 1% up to 50, 000. Additional foreign exchange conversion costs apply if you deposit the check to a non-USD account.
If you live in a foreign country other than Switzerland:
- Ask your local bank about depositing the US Treasury check. Many European banks no longer allow check deposits, they have moved past checks, so you may have trouble in those situations. When that’s the case, opening a US bank account may be the best alternative.
Another idea we have heard from some readers is to endorse the US Treasury check to someone else and have them deposit the checks in their own US accounts, then transfer the money via wire to a foreign account owned by the US expat.
If you are planning on going this route, be aware that many banks consider third party endorsements risky, and that they may not honor such endorsed checks for deposit. Before taking this step, please verify with the relevant bank that this will not be a problem. Since this varies from bank to bank, it is important to ask the question before endorsing your US Treasury check to a third party. Additionally, make sure the third party helping you out is 100% trustworthy. There is nothing stopping them from keeping the cash and never wire you the money after the check is deposited in their accounts.
The good news?
According to the IRS, the vast majority of the EIP3 individual payments will be made by direct bank deposit. Unlike EIP1 and EIP2, these payments come after the IRS has been collecting taxpayer bank information for a year.
The check abroad issue is therefore an issue that should be affecting a small minority of US expats. Solutions to the problem exist, as you have just learned, so there is no reason to prevent you from accessing your money.
Do you more questions about these payments and how fast you can expect to receive it?
This IRS news release provides a ton of helpful information:
I hope you find this information useful and that it allows you to put your check to good use.
If you haven’t already subscribed to our newsletter to stay up to date with tax news, please do so. There’s always something new coming down the pike!
Un abrazo y buena onda. Much love,