Canadians of American nationality, who may not have paid taxes in the United States for decades, are still eligible for the Trump administration’s one-time pandemic support payment.
In order to obtain payment, Canadians with dual US nationality and US citizens living and working in Canada must have filed an income tax return with the Internal Revenue Service for 2018 or 2019 declaring their overall income.
In some cases, people who are entitled to payment can also receive full payment for the US benefit COVID-19 while earning much more per year than they would if they lived in the United States because of special tax exemptions only available for US expats.
Democrats Abroad, a Canadian group that helps Americans vote, file taxes and stay informed while living abroad, organized a seminar last month explaining how their members could request payment.
“Most of them are surprised, really surprised, because … there are people who have been here for 40 years and they have never received a cent from the American government, except some who receive American social security checks , and they aren’t much – and now, suddenly, they get $ 1,600, “said Ed Ungar, co-vice president of Democrats Abroad.
“They’re really happy to have it, but it wasn’t something they were counting on. “
Ungar said he didn’t know anyone who received the payment, but said most of the people he spoke to were confident the payment would arrive within six months.
In the United States, many Americans who have their IRS bank details have already received their payments. Many of those who are not yet waiting for their checks.
The problem for many dual citizens in Canada is that even though many have filed their tax returns with the IRS for years, no bank account is attached to their returns because they haven’t had to pay penalties or receive payments.
Without a US-based bank account, dual Canadians and Americans living and working here have no way of receiving electronic payment. They must wait until the checks are sent to the addresses when they last declare their income.
Filing global income with the IRS
US citizens living abroad who wish to retain their US citizenship are required to file an annual US tax return detailing their global income.
If it is determined that the American citizen paid foreign taxes lower than what he would have done if he had earned the same income in the United States, he must pay the difference to the IRS.
The IRS economic impact payment, the EIP, is similar to Canada’s emergency response benefit, the CERB – a cash payment available to citizens across the country who are experiencing financial hardship due to the pandemic.
Canadians eligible for CERB can apply for up to four four-week periods. The PIE is a single payment.
To be eligible for the full IEP of US $ 1,200 (CAN $ 1,687), plus an additional US $ 500 ($ 702) for each eligible child, US citizens can earn a maximum of US $ 75,000 ($ 105,400) in as an individual, or US $ 112,500 ($ 158,100) if they are single parents.
Married couples whose combined earnings do not exceed US $ 150,000 ($ 210,800) are entitled to a joint benefit of UA $ 2,400 ($ 3,374).
A major difference between Canadian and American pandemic benefits is that in Canada, people have to request them, but in the United States, payment is automatically allocated, provided the person has filed a tax return. in 2018 or 2019.
The maximum payment of the US EAP is gradually reduced once people reach their maximum amount of earned income until the benefit is cut to US $ 99,000 ($ 139,200) for individuals, to US $ 136,500 ($ 192,000) for single income families and $ 198,000 US ($ 278,300) for single people. two-income families.
Earn more in Canada
The main difference for U.S. citizens living abroad is that they are allowed to exempt up to US $ 103,900 ($ 146,000) in income from their 2018 tax return, or US $ 105,900 ($ 149,000) income from their 2019 return.
“A person living outside the United States would actually earn more income than a person living in the United States and would be eligible for this benefit because of this exclusion of income earned abroad,” said Kevin Kirkpatrick, American tax lawyer at the international firm Moody’s.
In some cases, excluding income earned abroad can effectively reduce a person’s income to the level where they can still receive the benefit.
For example, in 2018, an American citizen living in Canada could have earned CAN $ 250,000 while being eligible for the full PIE – but if he lived in the United States, he could have earned a maximum of about $ 105,000 while benefiting of the same benefits.
The CBC has requested information from the IRS and the U.S. Embassy in Ottawa on the number of U.S. citizens who live in Canada and file tax returns in the U.S., but neither agency has could provide this information.
Several follow-up questions to the Embassy and the IRS had not been returned at the time of publication.
According to the 2016 census, 377,410 people in Canada identified themselves as wholly or partially of American origin.