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What should international students in the US do if they received a US$1,200 stimulus check?

travel restrictions
The US travel restrictions are extensive. Source: Chip Somodevilla/ Getty Images via AFP

In mid-April, some international students in the US got a surprise when they found US$1,200 deposited in their bank accounts or via a cheque in the mail.

The money is from the historic US$2 trillion stimulus bill to counter the devastating impact of COVID-19 on the US economy. It is to help American workers, small businesses and industries grappling with the economic disruption.

Unlike in Canada and New Zealand, international students in the US are excluded from this list of federal aid recipients.

International students on F1 and J1 visas are considered US nonresident aliens, disqualifying them from the aid.

According to CNet, only single US residents who have an adjusted gross income of less than US$99,000 are due up to $1,200 in aid, while couples would receive up to US$2,400, plus US$500 per child.

Why did international students receive an erroneous stimulus check?

So how did so many international students end up receiving the stimulus payment? Turns out it was due to a tax glitch.

Business Insider recently reported that the Internal Revenue Service has issued guidance and confirmed that some stimulus payments were sent by mistake to “nonresident aliens, incarcerated people, and deceased taxpayers”.

The distribution stimulus payments were largely based on 2018 and 2019 tax returns.

According to Politico, the error comes from a common tax-filing mistake where international students turn to TurboTax and other filing systems when they file their taxes without realising that these systems are only designed for US citizens.

International students who work on campus are required to file taxes every year and must have a registered social security number.

The IRS is now asking all recipients to return the payment if they have mistakenly received it.

How do you return the stimulus payment?

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So if you’re one of these international students who mistakenly received the stimulus payment of $1,200 — or any other amount — the best thing to do is return it.

For those who received the payment via check or direct deposit, the right way to return it is to follow the official guidance on the IRS tax website on how to return an erroneous refund. If you’re not sure how to go about this, contact the IRS or an international student advisor.

We’re sure it’s a bummer to have to return the payment, but its the right thing to do. You’re not alone in this dilemma — a survey by tax firm Sprintax of 500 schools found that 43 percent of them had students and scholars who believed they mistakenly received a stimulus payment.

A French citizen who graduated from the University of Toledo in 2018 and now lives in Zurich told Politico, “One day I just saw my account and I had 1,200 bucks without even requesting anything, I knew they were planning to give stimulus payments but I didn’t know when it was happening.”

“I never tried to commit fraud or anything. I contacted the IRS to tell them that I’m not in the US  anymore and that I should not have received this stimulus check and I wanted to find a way to give the money back. I don’t really want to use that money because it doesn’t really belong to me.”

What if you’ve already spent the money?

international students stimulus check

US President Donald Trump’s name appears on the coronavirus economic assistance checks that were sent to citizens across the country April 29, 2020 in Washington, DC. Source: Chip Somodevilla/Getty Images/AFP

If you’ve already spent the money, contact the IRS or your international student office to find out what you should do (and speak to your parents, of course).

Do not panic. Business Insider noted that while the IRS guidance advises erroneous recipients to return the money immediately, there is no official mandate.

Plus, under the CARES Act — a law meant to address the economic fallout of the COVID-19 pandemic in the US — there is no provision that allows the IRS to take back money it has already disbursed during the coronavirus emergency.

Although it’s not clear at the time of writing what will happen if you don’t return it, it’s best to seek official guidance to avoid any tax fraud issues down the line.

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