When the United States passed a stimulus package earlier this year that sent $1,200 checks to millions of Americans, there was one segment of the population that struggled to collect theirs more than almost any other: American expats and digital nomads living abroad. For many, the process turned into a nightmare filled with delays and uncertainty. In fact, one survey estimated that only 65% of those living abroad were even able to use the IRS’ “Get My Payment” tool that caused headaches for so many of us last summer.
With the potential for a second round of stimulus checks in early 2021 looming, one expert says expats should start preparing now to avoid running into more delays and anxiety. MyExpatTaxes is a software that helps American expats with online tax filing. According to their co-founder and CEO, Nathalie Goldstein, the company grew tenfold during the pandemic as Americans living abroad scrambled to make sense of how to collect their stimulus payment. It’s made them one of the fastest-growing startups in the space. Goldstein is an American expat herself living in Vienna. She is now urging fellow expats to make a plan that will save time and trouble later if the incoming Biden administration passes another round of stimulus checks.
We sat down with Nathalie to understand what challenges expats should be aware of, what to do about it, and even the surge in mail-in voting among their expat customers during the November election. So if you’re living and working abroad, here’s what to know.
GritDaily: What kind of challenges did you see expats have while trying to collect their 2020 stimulus checks?
Nathalie Goldstein: MyExpatTaxes conducted a survey in May to gain better transparency around the Stimulus program for our customers. Based on these results, only 65% of expats were able to see the status and eligibility of their check on the IRS “Get My Payment” tool.
The most common issues expats found on the IRS platform involved the processing of foreign information, such as foreign addresses which often contain foreign lettering and foreign zip codes. On top of that, Direct Deposit of the Stimulus Payment was only allowed for US bank account holders, despite the fact that many expats use their foreign bank accounts for deposits of Social Security Benefits. For these reasons, Stimulus Payments were being sent to the address from their 2018 tax return, rather than their current address.
Receiving the stimulus check depended on filing a 2019 tax return. However, there were additional issues as paper tax filing was not being processed at all at the IRS and the majority of online tax software does not allow expats to electronically file.
MyExpatTaxes is the only tax software designed just for US Expats, which allows for efficient and effective tax filing so expats can receive their checks as fast as possible while remaining in good standing with the IRS.
GD: Was there a surge in expat mail-in voting during the 2020 presidential election?
NG: We believe there was. From hundreds of our expat tax filing customers who were surveyed, 70% of them were already registered to vote, and 89% planned on voting in the U.S. Federal Elections.
The Washington Post reported that voter turnout in the 2016 Presidential Election was the lowest since World War 2. Only 36.4 percent of the voting-eligible population cast ballots and only 1 million out of 6 million Americans abroad voted. Per our early survey results, it does look like the tides have turned, and expats were motivated to vote this year.
GD: How should expats prepare for a potential second stimulus check to avoid delays in payment?
NG: As we await the second stimulus payment to be released, we know from the first one what the most common pitfalls are to avoid this time around:
1) File 2020 taxes early. From our original Stimulus Check Survey we did back in May, we found that out of our US expat survey participants, only 29% have received their stimulus payments at that point. 57% of those who received their stimulus payment reported that it took more than two weeks after filing their 2019 tax return to receive it, with the majority stating it took at least four weeks or longer. Therefore, knowing that expats will most likely face delays, it is better to file earlier.
2) Get a US bank account for your 2020 taxes. Direct deposits will always be a faster and more efficient way to receive an IRS refund than a paper check.
3) Whenever possible, use a US address on your 2020 tax return, where you have a trusted person to receive your mail. Most foreign countries don’t accept a US paper check, so it is better to have the check sent to a trusted person who can cash it on your behalf.
GD: What challenges do expats normally face in their tax filing in a normal year?
NG: The main challenge is that expats don’t know they need to file an annual tax return to the IRS, even if they haven’t been in the US at all during that year. This is a big issue for those married to non-US Citizens, who tend to file as Married Filing Separately since the filing threshold for them is a measly 5 US Dollars. In addition to filing an annual tax return, they may also need to declare their foreign bank accounts to the US Treasury or face a penalty of $10,000 per year.
On top of this, expats normally cannot use their family tax accountants or the popular US tax software programs due to the complexity of international tax law. Rather they usually need to rely on a specialized expat tax firm, where the price of filing a tax return starts at $500. This is why we created MyExpatTaxes, the leading US Tax Software for Expats – allowing expats to file in 30 minutes and starts at a flat fee of 149 euro.
GD: Are you able to say how many users MyExpatTaxes served in 2020?
NG: Thousands of expats in over 170 countries have used MyExpatTaxes to file their tax returns. Of this, 16% required the Streamlined Procedure, an IRS Amnesty Program for Expats, which requires them to file 4 years of taxes and 7 years of Foreign Bank Account Reports to become tax compliant.
Even as our client exponentially increases with demand, we are proud to still offer a high standard of customer service, which keeps our users coming back and bringing their friends.