Thousands of Americans living abroad received stimulus checks. Here’s why
Thousands of Americans living abroad received stimulus checks.  Here’s why

Thousands of Americans living abroad received stimulus checks. Here’s why

Douglas Sacha | Moment | Getty Images

Thousands of Americans living abroad received stimulus checks during the Covid-19 pandemic, according to federal data.

While it may sound inconsistent with the concept of “stimulus” for the U.S. economy, lawmakers generally had a sound rationale for sending funds abroad, according to tax policy experts.

“They cast a very wide net and [payments may] go to places where people think, ‘Do they really need to go there?’, “said Kyle Pomerleau, a senior fellow at the American Enterprise Institute, a right-wing think tank.” But I think the answer in general is: ‘ Yes. ‘”

More from Invest in You:
These companies have a 4-day work week. Here is what they have learned
Here are the 5 most valuable – and 5 least valuable – college majors
Make these financial and career moves before you quit your job

The IRS issued more than $ 3.7 million worth of $ 5.5 billion to individuals outside the 50 states and Washington, DC, according to the agency Statistics. The figures include three rounds of payments from the pandemic period until June 3, 2021. (Additional payments may have been sent since then.)

The data include U.S. citizens abroad, military members stationed abroad, and residents of U.S. territories such as Puerto Rico. (While U.S. territories are not “overseas” in the sense that foreign countries are, the IRS does not report these statistics separately.)

Less than 1%

About 9 million U.S. citizens live abroad, according to the U.S. State Department.

It is natural that many of them would get checks because of the expansive eligibility framework set by Congress, Pomerleau said.

The volume of overseas payments is also small relative to the total amount – 0.7% and 0.8%, respectively, of the $ 803 billion and 472 million payments issued over three rounds of financing.

“The size of the payments going abroad is less than 1% of [total]said Pomerleau. “It was not really much when you look at it.”

Congress authorized the IRS to send stimulus checks three times during the pandemic: in March 2020 (up to $ 1,200 per person), in December last year ($ 600) and last March ($ 1,400).

The funds are technically prepayments of a refundable tax deduction (recovery rebate credit). The advance payments are called Economic Impact Payments – the legislative terminology for what Americans have come to call “stimulus checks.”

But the term “stimulus check” is something of a misnomer, according to tax policy experts.

The term suggests that lawmakers aim to stimulate demand for goods and services in the U.S. economy by sending money to households. But it appears that Congress’s primary intent was to strengthen household finances in a time of mass unemployment and economic hardship, according to political experts.

Whether American citizens live here or abroad is not a major difference in the midst of a worldwide pandemic.

Janet Holtzblatt

senior fellow at the Urban-Brookings Tax Policy Center

Incorrect payments

Of course, in the later rounds of payments, budget hawks hated spending more federal money, questioning whether households needed additional financial assistance as the economy began to pick up speed.

And the IRS wrongly sent funds to many non-citizens. (Congress only allowed payments to U.S. citizens and “resident aliens,” a category that includes people with a green card or who have been in the United States for a certain period of time.)

More than 30,000 checks worth more than $ 37 million were potentially erroneously disbursed to non-residents residing abroad. according to to the Treasury Inspectorate of Tax Administration. (Many such individuals may have filed a false tax return that made them appear to be resident in the United States.)

The federal government also made other erroneous payments, according to the watchdog, such as issuing double payments to people living in U.S. territories, paying funds to unauthorized relatives, and issuing payments to deceased persons. Overall, the IRS correctly paid at least 98% of first-round funds, the report said.

Leave a Reply

Your email address will not be published.