The $2 trillion Coronavirus Aid, Relief and Economic Security Act, or Cares Act, provides a $1,200 refundable tax credit for qualified individuals and $2,400 for qualified joint filers. There is an additional payment of $500 for every dependent child under 17.
“I was totally shocked,” Elizabeth said in telephone interview from her London home. “I never for a minute thought it was a possibility that I would get this money. I’m a rich foreigner getting American money. I don’t deserve this money. There are so many people in America who need it. I appreciate that the IRS had to get the money out fast so they couldn’t do thorough checks. But it just feels so wrong to have it in my account.”
Elizabeth worked for several years in New York under an E-2 investor visa as a communications consultant. She had a Social Security number and paid taxes, as required under the conditions of her visa. In 2018, she earned $13,000 over a few months before returning to Britain. Had she worked for the rest of the year, her annual income would have put her beyond the $99,000 individual cap for a stimulus payment.
Under the Cares Act, U.S. citizens, permanent residents and qualifying resident aliens, including those on the E-2 visas who meet the IRS’s “substantial presence test” for the calendar year, are eligible for stimulus payments if their adjusted gross income falls under certain limits.
Individuals with annual adjusted gross incomes (AGI) of $75,000 or less are eligible for the full $1,200 check. Married couples are eligible for $2,400 as long as their AGI income is under $150,000 a year.
If you’re single and your AGI is more than $99,000, you do not qualify for a stimulus payment. If you earn more than $136,500 and file as head of household, you do not qualify for a payment. For married people filing jointly, the cutoff for any payment is an AGI above $198,000.
Based on the length of time she was in the U.S. during 2018, on the advice of her tax professional Elizabeth filed a 1040 federal return and received a $300 refund, which was deposited into a U.S. bank account that she has kept open.
The E-2 nonimmigrant visa allows foreign nationals of certain countries such as Britain to be admitted to the United States when investing substantial capital in a U.S. business, according to U.S. Citizenship and Immigration Services. Elizabeth received her visa under this program.
About 54,000 applications or petitions a year for E-2 visas were reviewed from fiscal years 2014 through 2018, with an approval rate of over 80 percent, according to a 2019 Government Accountability Office report. “Generally, about half of the foreign nationals seeking E-2 status were investors, managers, or essential employees of an E-2 business, and the other half were their spouses or children,” the GAO said.
Unable to reach anyone at the IRS to figure out how to return the $1,200, Elizabeth sent me an email. “I cannot possibly be the only nonresident getting this payment,” she said.
The IRS and Treasury did not comment on how many individuals who are no longer living in the United States may have received stimulus money.
As with much of the broader stimulus effort, the urgency to get funds to 150 million Americans has resulted in payment mishaps and technological glitches.
Despite assurances from Treasury and the IRS that payments would be sent a certain way or deposited in people’s accounts on a particular day, many Social Security, disability and Veterans Affairs beneficiaries are reporting that this is not happening.
Thousands of people have reached out to The Washington Post reporting payments sent in error or never received. Parents are missing the $500 for dependent children under 17. Others are unsure what to do with payments directed to deceased spouses and relatives.
Martin Dueñes of the District was surprised to get a stimulus deposit for his father, who died last year. “As his successor trustee, I made certain that all appropriate agencies were notified of his death,” he said. “And yet I still received a check in the mail [April 27] for $1,200.”
Dueñes said on the check from the IRS the letters “DECD” — the abbreviation for deceased — were next to his father’s name. Dueñes, who received his own $1,200 stimulus payment, said his name was on the check as well.
“Am I to interpret this to mean they are acknowledging that he is deceased?” he asked. “Am I supposed to accept this money anyway? Am I supposed to return it? I realize this was a gargantuan effort to help U.S. citizens with the economic impact that the coronavirus pandemic has caused, but my fear is my dad’s case is not isolated. I can imagine the millions of dollars that are going unchecked and that could have been utilized on those truly in need.”
Under the Cares Act, estates and trusts are not eligible to receive stimulus payments. In earlier interviews, an IRS spokesman said it’s likely a surviving spouse could keep a payment sent to a deceased partner.
In a briefing, President Trump seemed to indicate that the IRS would claw back some payments, without specifying any exceptions.
“Sometimes you send a check to somebody wrong,” Trump said in an April 17 coronavirus task force press briefing. “Sometimes people are listed, they die, and they get a check. That can happen. … We’ll get that back.”
The IRS does not have real-time data on deaths for 2018 and 2019, which has resulted in people who passed away in those years receiving $1,200 payments.
A similar thing happened in 2009 under the American Recovery and Reinvestment Act, which called for a one-time $250 payment to certain adult Social Security and Supplemental Security Income (SSI) beneficiaries. Nearly 72,000 payments worth $18 million went to dead people who had been receiving benefits, according to a 2010 report by the Social Security Administration Office of the Inspector General.
In regard to dead people getting stimulus payments, a Treasury spokeswoman said this week, “We will be issuing guidance on this issue shortly.”
Until a decision is made, foreign nationals, spouses and heirs would be wise to hold on to the money in the event the funds have to be returned to the IRS.