With a view to alleviating some of the economic impact of COVID-19, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act at the end of March. This legislation includes support for Americans living in Japan.
“The good news is that U.S. citizens and green card holders residing in Japan are qualified to receive the U.S. coronavirus disbursement, which is being handled by the Internal Revenue Service (IRS),” says Tokyo-based taxation expert Calvin Tong.
Tong will be familiar to many readers, having helped with previous Lifelines columns about U.S. tax issues. This time he is joined by fellow international taxation specialist Ken Guilfoyle, as they deal with some frequently asked questions on who qualifies for the payment, how to apply and what to do once the payment is made.
How much can I receive?
An individual or family may receive the maximum or a reduced benefit depending on specific factors such as your filing status, the size of your family, the age of any dependents and level of income. All of these will affect the amount of the payment you receive. The maximum amount is $1,200 per spouse or individual filer and $500 per child under 17.
You must be a U.S. citizen or hold a green card, and have a Social Security number. Those holding Individual Taxpayer Identification Numbers (ITINs) do not qualify (with the exception noted below for members of the U.S. Armed Forces).
The adjusted gross income (AGI) on your most recent tax return on file with the IRS (the number on the Form 1040 Line 8b for 2019 or Line 7 for 2018) must be within the income threshold for your filing status.
Visit the IRS website for filing status, AGI thresholds and other general information.
How will the payment be made?
You can receive the payment either by direct deposit into a U.S. bank account or by check. If bank information was on a recently filed tax return or used for Social Security payments, the IRS will automatically use it for the direct deposit. Otherwise, a check is sent to the most recent address shown on a tax return. (Note: Until the middle of this month, the IRS had a website set up to collect the direct deposit bank information but it has since been closed.)
If for whatever reasons you don’t get your payment now, you can claim it as a credit on your 2020 tax return.
Does filing a joint return with a spouse who is not a U.S. resident disqualify me?
Yes. If your spouse is filing under an ITIN, you will not receive the payment. An exception is made if either spouse is a member of the U.S. Armed Forces at any time during the year and has an SSN, in which case both spouses qualify.
How does the age of my child affect their payment?
They should have been under the age of 17 during 2019.
When can I expect the check by mail?
The IRS is trying to get checks disbursed as soon as is practically possible. Recent batches appear to be released every Friday. Recipients of the May 1 group started seeing theirs appear in mailboxes during the week of May 11. Refer to this link to track the status of your payment.
How can I deposit the check?
For those with overseas addresses, opening a U.S. bank account in the United States is difficult unless done in person. If you have existing financial (bank or brokerage) accounts, it can be done via mobile check deposit using a smartphone. The practice is now mainstream with U.S. financial institutions and many offer apps for this purpose.
Those who don’t have U.S. accounts can try the major banks in Japan. Many have correspondent relationships with American banks. We have confirmed that SMBC Trust Bank Prestia offers such a service. The check can be deposited along with an account that can be set up online. The fee is ¥5,000 but if you meet their requirement to be a member of Prestia Gold, the service is free. Their site hasn’t posted information specific to the U.S. payments, so please contact their service number or visit their website if you have any questions.
What if I am qualified for the payment for one year and not the next?
If you qualified for 2018 but not for 2019, wait until you receive the payment and then file for 2019. If you can only qualify with 2019 income, file as soon as possible.
I haven’t filed a tax return for years. What should I do?
The best thing to do is file. If you haven’t been filing tax returns, you may be eligible for an IRS program called the Streamlined Filing Compliance Procedures. The eligibility requirements and procedures are quite involved and beyond the scope of this article, but you can find more information on the IRS website.
Is the U.S. payment connected to the Japanese stimulus payment?
No, the two are not connected.
Lifelines can’t reply to individual inquiries about the payments, but for further information, readers may contact Calvin Tong at email@example.com or Ken Guilfoyle, CPA, at firstname.lastname@example.org.
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