U.S. TAX GUIDE IN CHILE
Can US citizens in Chile still claim the stimulus payment?
During the COVID-19 pandemic, the US government sent out several stimulus payments to help citizens and green card holders, no matter where they were living.
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However, for many US expats living in Chile, there was a lot of confusion about who could actually claim these payments, especially if they were married to a non-US citizen or earning income abroad.
To clear things up: any US citizen or green card holder is eligible for these payments, as long as they meet the income requirements.
For the third stimulus payment, which was US$1,400 per person, you need to have earned less than US$75,000 in 2021 if filing as single, or US$150,000 if married filing jointly.
But there’s a catch: if you want to claim this stimulus payment, you need to have filed a 2021 US tax return. And you have until April 18, 2025 to file that return and get your stimulus payment if you haven’t already.
What about the first two stimulus payments?
The first two payments were issued as part of the 2020 tax return. To receive those, you would have needed to file your 2020 tax return by May 2024.
Unfortunately, if you missed that deadline, you won’t be able to claim those first two payments anymore.
However, you still have time to claim the third stimulus payment—which is the largest one, at US$1,400—by ensuring your 2021 return is filed in time.
What if I haven’t filed US taxes in years?
Let’s say you’re a US citizen or green card holder who has been living in Chile for years but hasn’t filed US tax returns in a long time—maybe you didn’t know you had to, or you got some bad advice along the way.
Thankfully, the IRS offers an amnesty program for US expats called the Streamlined Foreign Offshore Procedure. This program lets you catch up on your taxes without facing the steep penalties that would normally apply for not filing.
Here’s how it works:
- You only need to file the last three years of tax returns. For most people, that means 2021, 2022, and 2023.
- You also have to report the highest balance of your foreign bank accounts over the past six years using the FBAR (Foreign Bank Account Report). This form is required if your combined foreign bank balances ever exceeded US$10,000 during the year.
Finally, you submit an offshore certification to the IRS, explaining why you hadn’t been filing and committing to staying compliant in the future.
Can I still get the US$1,400 stimulus payment through the amnesty program?
Absolutely, as long as you file your 2021 return by April 18, 2025.
If you haven’t filed your 2021 tax return, the Streamlined Foreign Offshore Procedure gives you the perfect opportunity to do so while getting back in good standing with the IRS.
Filing for 2021 will allow you to claim the third stimulus payment if you’re eligible.
Not only will this help you avoid penalties, but you could also get US$1,400 back in your pocket!
What are the benefits of the Streamlined Foreign Offshore Procedure?
- No penalties: The IRS won’t hit you with penalties for late filing if you go through this program.
- Limited filing: You only have to file the last three years of tax returns, which is much more manageable than trying to go back and file for every missed year.
- Claim the third stimulus payment: While catching up on your taxes, you can still claim the US$1,400 stimulus check if you’re eligible, making the process even more appealing.
How expensive is the process?
The cost of going through the Streamlined Foreign Offshore Procedure is relatively low, especially when you consider the benefits of getting back in good standing with the IRS.
Plus, the US$1,400 stimulus payment could offset some of the costs, making it an affordable way to regain tax compliance.
In short, this program is a win-win for many US expats. You get compliant, avoid penalties, and possibly even walk away with some extra cash from the US government.