U.S. EXPAT TAX GUIDE – INDIA

How can US expats in India still claim the 2021 stimulus payment?

US citizens, including those with dual Indian/US citizenship living in India, can still claim the third stimulus payment—known as the Recovery Rebate Credit—worth US$1,400 per person.

To do so, you must file your 2021 tax return by April 18, 2025.

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What are the qualifications for the 2021 stimulus payment?

To claim the US$1,400 Recovery Rebate Credit, there are a few requirements you must meet:

Valid Social Security number: You and your spouse (if filing jointly) must each have a valid US Social Security number.
Income thresholds:
- If you’re filing as single or married filing separately, your adjusted gross income (AGI) must be under US$75,000 to qualify for the full payment.
- For those filing as married filing jointly, the AGI must be below US$150,000 before the credit begins to phase out.
- For Head of Household filers, the income limit is US$112,500.
Dependents: Eligible dependents may qualify for an additional US$1,400 payment if they meet specific IRS criteria.

When is the deadline to file and claim the stimulus payment?

The deadline for filing your 2021 tax return and claiming the stimulus payment is April 18, 2025.

Missing this deadline means you will forfeit your eligibility for the Recovery Rebate Credit.

How does the Foreign Earned Income Exclusion impact eligibility?

You could still qualify for the payment even if your income initially exceeds the limit—thanks to the Foreign Earned Income Exclusion (FEIE). The FEIE allows US expats to exclude up to US$108,700 of their foreign-earned income from their taxable income in 2021.

This can help bring your adjusted gross income below the eligibility threshold for the stimulus payment.

For example, if you earned US$150,000 in 2021 while residing in India, you could use the FEIE to exclude US$108,700, bringing your taxable income down to US$41,300.

This amount is within the income limit for a single filer, allowing you to qualify for the full US$1,400 payment.

How does the stimulus payment phase-out based on income?

The amount of the stimulus payment phases out gradually once your income surpasses the eligibility limits:

Single filers: Payment phases out completely between US$75,000 and US$87,000.
Married filing jointly: Phase-out begins at US$150,000 and ends at US$174,000.
Head of household: Phases out starting at US$112,500 and ends at US$124,500.

If your income falls within the phase-out range, the payment you receive will be reduced proportionally. Those earning above the phase-out thresholds will not be eligible for the payment.

How will the payment be received?

If you qualify for the Recovery Rebate Credit, the payment will be applied to your 2021 tax return. If you are due a refund, the US$1,400 will increase your refund amount.

You can have this additional refund directly deposited into a US bank account or receive it via a mailed check, depending on your filing preferences.

Can expats married to non-US citizens still claim the payment?

Yes, US citizens married to non-US citizens can still claim the stimulus payment. However, the filing status used plays a crucial role in eligibility:

Married filing separately: If your spouse does not have a Social Security number, filing separately is generally your best option to claim your US$1,400 payment.
Income reporting: You do not need to include your non-US spouse’s income in your US tax return, but you must clearly state your filing status as married filing separately to be eligible for the payment.

What happens if you miss the filing deadline?

Missing the filing deadline—April 18, 2025—will mean that you no longer have the opportunity to claim the Recovery Rebate Credit.

What should US expats in India do to claim the stimulus payment?

If you are a US citizen or Green Card holder in India and haven’t yet claimed the 2021 stimulus payment, it’s important to act quickly before the April 18, 2025 deadline. Here are some steps you should follow:

Gather your documents: Collect necessary financial documents, such as income statements, bank account details, and any foreign account information.
Choose your deductions: Decide whether to use the standard deduction or itemize your deductions. If eligible, apply the FEIE to reduce your taxable income.
File your 2021 tax return: Submit your 2021 tax return to claim the Recovery Rebate Credit. Make sure to file before the deadline to receive the payment.
Consult with a tax expert: If you’re uncertain about the filing process or eligibility, consult with a tax professional experienced in both US and Indian tax laws. They can guide you through the entire process, ensuring you meet all requirements and deadlines.

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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