If you haven’t claimed your Covid payments, now is the time to do it. A family with two eligible adults and two dependent children could receive up to $11,400 from Covid payments. The streamlined procedure is simple and efficient to help you claim all three of these payments, but the first two payments need to be claimed before June 15, 2024! This deadline is based on the three-year refund window, meaning you have three years from the due date of the return, including extensions, to claim a refund. If you were not abroad previous to May 17, 2021 then your due date to claim 2020 Covid payments is May 17, 2024.
The Basics of the Streamlined Procedure
The streamlined procedure for Americans abroad to become tax-compliant without facing penalties may be an essential first step. It's an IRS initiative designed to help expatriates catch up on their U.S. tax filings.
- Eligibility: It's meant for U.S. taxpayers who have not willfully avoided tax filing. If you haven't filed due to a misunderstanding of the requirements, this is for you.
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Coverage: The procedure typically includes filing the last three years of federal tax returns and six years of Foreign Bank Account Reports (FBARs), if applicable.
You will still need to file your current federal tax return and FBAR as well. Even if you’ve not filed for more than three years, you still will only do the last three to come into compliance. - Penalty Relief: One of the biggest advantages is that individuals who comply through this process are not subjected to failure-to-file penalties or stiff FBAR penalties.
- Deadline: It's time-sensitive, with a deadline of June 15th, 2024 for claiming Covid payments from your 2020 return.
How this Relates to Covid Payments
Many U.S. expats have missed claiming Covid payments due to the complexity of filing U.S. taxes from abroad. Here's how streamlining helps:
- Access to Payments: It facilitates the process of claiming the first two rounds of Covid payments before the upcoming deadline. You will also be able to get any other unclaimed Covid payments or Child Tax Credit refunds.
- Compliance for Future Benefits: Staying compliant through streamlining ensures eligibility for potential future refunds or tax credits.
Efficiency of the Streamlined Procedure
The streamlined procedure is designed to simplify the tax-filing process for U.S. citizens living abroad.
- Simplified Process: It reduces paperwork and consolidates past-due tax filings into a single, manageable process.
- Time Savings: Expats can file multiple years of taxes and FBARs simultaneously, saving valuable time.
- Cost-Effectiveness: Avoiding the need for individual filings for each year, the procedure can be more cost-effective than traditional methods.
Avoidance of Potential Tax Complications
Opting for the streamlined procedure expedites the process and minimizes the potential tax complications that can arise from filing U.S. taxes from abroad. By streamlining you're proactively addressing several issues:
- Penalty Avoidance: It eliminates the risk of incurring penalties for late filings or non-disclosure of foreign assets.
- Clear Compliance: It provides a clear path to becoming compliant with U.S. tax laws, reducing the risk of future audits or inquiries.
- Future Preparedness: Once compliant, you'll find it easier to manage future tax obligations and stay up-to-date without falling behind again.
Importance of Claiming Covid Payments Before June 15th, 2024
- Final Opportunity: This is the last chance to claim the first two Covid payments.
- Tax Compliance: Filing before the deadline helps ensure you are tax-compliant, which can be beneficial for future filings and potential benefits.
- Financial Impact: Many expats have received payments upwards of five figures.
Prioritize the streamlined procedure now to secure your Covid payments and maintain good standing with your U.S. tax obligations.
You can file your 2020 and 2021 returns to claim the Covid payments without using the Streamlined Procedure IF you weren’t required to file a U.S. tax return in 2020 and 2021 (use the Do I need to file? tool on the IRS website to determine if you fit this criteria.)
However, if you were supposed to file but didn’t, in either or both of those years, using the Streamlined Procedure will guarantee your tax-compliance with the IRS.
Potential Consequences of Delayed Claims
- Forfeiture of Funds: Missing the June 15, 2024 deadline could mean permanently losing access to the Covid payments you're eligible for.
- Compounded Tax Issues: Delay in becoming tax-compliant can compound existing tax issues, making it more challenging, and potentially more expensive, to resolve later.
- Stress and Uncertainty: Procrastination often leads to increased stress and uncertainty regarding your financial and tax standing.
To avoid these possible consequences, use the streamlined procedure to become tax-compliant and claim any Covid payments, refundable credits, or refunds you’re due now.
About Nathalie Goldstein
Enrolled Agent & CEO of MyExpatTaxes, the leading U.S. expat tax software
Named in Forbes 2022 “30 Under 30” list, Nathalie is a U.S. expat based in Vienna since 2015 and originally from Silicon Valley. She is the co-founder and managing director at MyExpatTaxes, the leading online U.S. tax filing software specifically created for expats that supports streamlining applications. An accredited IRS Enrolled Agent, Nathalie's mission is to make the expat filing process easier and more streamlined, especially for her fellow DA members.
Disclaimer: Democrats Abroad cannot provide individual tax advice. Advice requires consideration of your individual circumstances and needs, none of which can be done at this event. We are not tax lawyers, accountants, or advisers. Please consult a professional tax adviser/accountant/return preparer when addressing your personal tax matters.
Democrats Abroad does not endorse or recommend companies or individuals attending or hosting this event. The views expressed at the event are those of the respective individuals and companies, not Democrats Abroad. No liability is accepted by Democrats Abroad for the opinions expressed, or for any errors or omissions expressed about matters of tax in any country, your financial planning, or your legal obligations.
If you are in need of tax advice you can consult the IRS Tax Return Preparer Directory to find an advisor or tax return preparer near you or providing online services to meet your needs and budget, though buyers need always beware: https://irs.treasury.gov/rpo/rpo.jsf