On May 11, 2020, the IRS issued guidance about how to return an Economic Impact Payment (EIP), also known as a COVID-19 stimulus payment. Ineligible individuals who receive EIPs are required to return them.
Resident and Nonresident Alien EIP Eligibility
The IRS guidance indicates that:
- A person who is a nonresident alien in 2020 is not eligible for the EIP.
- A person who is a qualifying resident alien with a valid SSN is eligible for the EIP only if the person is a qualifying resident alien in 2020 and could not be claimed as a dependent of another taxpayer for 2020.
Aliens who received an EIP, but are not eligible, should return the EIP to the IRS.
The IRS guidance in Q41 sets out details about how and where to return an erroneous payment depending on whether an individual received a paper check or direct deposit payment and where the individual lives.
One way a person can be a resident alien is if they satisfy the IRS substantial presence test. The substantial presence test is based on a calculation of the number of days that an individual has been physically present in the U.S. The calculation formula is very specific, but most nonimmigrants who have been in the United States for at least half of 2020 will be considered resident aliens in 2020 for tax purposes. However, there are individuals whose days in the U.S. in certain visa categories do not count toward the calculation. That includes some students on a F visa. Generally, foreign students on F visas in nonimmigrant status who have been in the United States fewer than five calendar years remain nonresident aliens and are exempt from social security/Medicare taxes.
While the above sets out general outlines regarding resident aliens, EIPs, and the IRS Code, the regulations are very detailed. Before taking any action, you should reach out to counsel to determine what, if any steps, should be taken.