U.S. EXPAT TAX GUIDE – CHILE

Can US expats in Chile still receive the stimulus payment?

Yes, US citizens and green card holders living in Chile may still be eligible to claim the third stimulus payment. These payments, provided during the COVID-19 pandemic, aimed to support Americans worldwide.

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For the third payment of US$1,400 per person, eligibility is based on income thresholds. If your adjusted gross income (AGI) in 2021 was US$75,000 or less for single filers, or US$150,000 or less for married couples filing jointly, you qualify.

To receive the payment, you must file a 2021 US tax return no later than April 18, 2025.

Can expats still claim the earlier stimulus payments?

Unfortunately, the first two stimulus payments were tied to the 2020 tax return, and the deadline to file that return passed in May 2024. If you missed that deadline, you can no longer claim those payments. However, you can still file your 2021 tax return to claim the third payment.

What should I do if I haven’t filed US taxes in years?

If you’ve been living in Chile and haven’t filed your US taxes for several years, you’re not alone. Many expats find themselves in this situation, often due to confusion about their tax obligations. Thankfully, the IRS offers a program called the Streamlined Foreign Offshore Procedure to help you get back on track without facing penalties.

What does the Streamlined Foreign Offshore Procedure involve?

Filing three years of tax returns: You only need to submit returns for the most recent three years. Typically, this means filing for 2021, 2022, and 2023.
Reporting foreign accounts: You must file FBARs (Foreign Bank Account Reports) for the past six years if your foreign bank accounts exceeded US$10,000 at any time during those years.
Providing an explanation: You’ll submit a certification explaining why you haven’t filed previously and commit to staying compliant moving forward.

Can the US$1,400 stimulus payment still be claimed through this program?

Yes, filing your 2021 tax return as part of the Streamlined Foreign Offshore Procedure makes you eligible to claim the third stimulus payment. If your income meets the criteria, you can still receive the US$1,400 payment by submitting the required forms before the April 18, 2025 deadline.

What are the key benefits of this program?

No penalties: The IRS waives penalties for late tax filing and FBAR submissions.
Simplified requirements: You only need to file for the past three tax years instead of addressing every missed year.
Eligibility for the stimulus payment: Catching up on taxes through this program ensures you can claim the third stimulus payment if you qualify.

Is the process expensive for expats?

The costs involved in using the Streamlined Foreign Offshore Procedure depend on whether you file yourself or hire a professional. However, the benefits—including avoiding penalties and receiving the US$1,400 payment—often outweigh the expenses. For many expats, this program is a practical way to become tax-compliant while reducing financial stress.

Why is filing your 2021 return so important?

Filing your 2021 tax return is essential for claiming the third stimulus payment. Even if you owe no taxes, submitting the return ensures you meet the IRS requirements to receive the payment. The Streamlined Foreign Offshore Procedure provides a penalty-free opportunity for expats who haven’t filed in years to catch up.

How are stimulus payment amounts calculated for US expats?

US expats can qualify for stimulus payments (also called Economic Impact Payments) if they meet certain rules. The amount you receive depends on your income, filing status, and whether you have dependents.

What affects your stimulus payment?

Income (AGI): The IRS looks at your Adjusted Gross Income (AGI) on your most recent tax return. If your income is too high, your payment may be reduced or phased out completely.
Filing Status: Single filers, married couples filing jointly, and heads of household have different income limits for full payments.
Dependents: You may get extra money for each qualifying dependent, such as children under the Child Tax Credit rules.
Plus-Up Payments: If your income dropped in 2020 compared to 2019, you could qualify for a plus-up payment to adjust your amount.

How do US expats receive their stimulus payments overseas?

Direct Deposit: This is the fastest option. If you included a US bank account when filing your taxes, the IRS will send your payment directly to your account.
Paper Checks: If you don’t have direct deposit set up, the IRS can mail a check to your foreign address. Keep in mind that delivery may take longer.
EIP Debit Card: Some expats may receive their payment on a prepaid EIP debit card, which you can use to withdraw cash or make purchases.

Do tax treaties affect stimulus payments for US Expats in Chile?

Tax treaties between the US and countries like Chile are designed to prevent double taxation on income such as wages, dividends, and pensions. However, these treaties don’t directly impact stimulus payments (also called Economic Impact Payments) since these payments are based on your US tax return, not how your income is taxed under a treaty.

Stimulus payments are calculated using your adjusted gross income (AGI), filing status, and number of dependents. Taxes you pay in Chile, like the global complementary tax, or any tax credits you claim for US taxes, won’t change the amount of your payment.

One thing to note is the savings clause in most tax treaties. This allows the US to tax its citizens no matter where they live. To receive a stimulus payment, you must file a US tax return, even if you live in Chile. Filing late or not filing at all could delay your payment.

If you’re unsure about how tax treaties or US filing requirements work, it’s a good idea to get advice from a tax professional.

How do I claim missed or inaccurate stimulus payments?

If you’re a US expat and didn’t receive your stimulus payment or the amount was wrong, don’t worry—you can still claim it. The IRS provides a way to recover missing payments through the Recovery Rebate Credit.

Steps to Claim Your Payment

File a Tax Return: To claim missing payments, file Form 1040 and include the Recovery Rebate Credit. Even if you didn’t need to file taxes in the past, this step is necessary to get your payment.
Check the Status: Use the IRS Get My Payment Tool to track your payment. This tool can help identify issues, like an incorrect direct deposit setup or problems with your foreign address.
Request a Payment Trace: If the IRS shows your payment was sent but you didn’t receive it, follow the Economic Impact Payment Tracing Procedure to locate it.

Helpful Tips for Expats

Look at the IRS’s frequently asked questions for answers to common problems, such as error messages.
Groups like Democrats Abroad often offer support for expats dealing with missing stimulus payments.

Be sure to meet all tax filing deadlines to avoid delays in claiming your payment.

If you’re unsure about how tax treaties or US filing requirements work, it’s a good idea to get advice from a tax professional.

Why do US expats need to update their information?

The IRS uses the information from your most recent tax return to send payments. If your bank account details, foreign address, or Social Security number (SSN) are incorrect, your payment could be delayed or sent to the wrong place.

How to update your information

Use the Get My Payment Tool: This online tool lets you check the status of your payment and update your direct deposit information.
File Your Taxes: If you haven’t filed taxes recently, submitting a tax return ensures the IRS has your latest information, including your income and dependents.
Update Social Security Info: Form SSA-1099 is sent to people who receive Social Security benefits. It shows the total benefits you received in a year, which the IRS uses to calculate your eligibility for stimulus payments.
Form RRB-1099: This form is for individuals receiving benefits from the Railroad Retirement Board. Like SSA-1099, it reports yearly benefits and is used to assess payment eligibility.

What if you don’t get your payment?

If your payment doesn’t arrive, you can ask the IRS to trace it. Keeping your information current is the best way to avoid delays.

If you’re unsure about how tax treaties or US filing requirements work, it’s a good idea to get advice from a tax professional.

What special circumstances can affect stimulus payments for US expats?

If you’re a US expat, certain situations might affect your ability to receive a stimulus payment (also called an Economic Impact Payment). Here’s what to keep in mind:

Using Tax Exclusions

Expats who use the Foreign Earned Income Exclusion (FEIE) or the Foreign Housing Exclusion to lower their taxable income can still qualify for a stimulus payment. However, your adjusted gross income (AGI)—after these exclusions—must be within the eligibility limits. You’ll need to file Form 2555 to claim these exclusions.

Filing with a Non-Resident Spouse

If you’re married filing jointly with a spouse who isn’t a US citizen or doesn’t have a Social Security number (SSN), you might not qualify for a stimulus payment. Filing separately could solve this issue, but it’s important to check your options.

Delivery Delays

If you have a foreign address or use a foreign bank account, it may take longer to receive your payment. Make sure your information is updated with the IRS to avoid delays.

Dependents and Residency

Claiming dependents for the Child Tax Credit or meeting residency tests like the Physical Presence Test doesn’t affect your eligibility for stimulus payments.

Staying on top of your US tax filings and keeping your details updated with the IRS can help you receive your payment without problems.

How can US expats in Chile simplify their tax filing?

Act before the deadline: Ensure your 2021 tax return is filed by April 18, 2025 to claim the stimulus payment.
Work with a professional: A tax expert familiar with expat requirements can help navigate the process and maximize your benefits.
Stay compliant moving forward: After catching up, file your taxes annually to avoid future complications.

For US citizens in Chile, filing your 2021 return offers both a chance to claim financial relief and an opportunity to resolve any past tax compliance issues. By taking advantage of programs like the Streamlined Foreign Offshore Procedure, expats can achieve peace of mind while ensuring they receive any owed benefits.

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.

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