In response to the economic disruptions caused by the global pandemic, the United States government introduced two rounds of financial relief payments known as Economic Impact Payments. While these were designed to support eligible taxpayers, many individuals who did not meet the qualifying criteria, including nonresident aliens for tax purposes, received them in error. We explored the second stimulus payment in depth and helped clarify what nonresidents in the United States should know if they unexpectedly received the $600 payment.
Understanding the Second Economic Impact Payment
In December 2020, the U.S. Congress passed the Coronavirus Response and Relief Supplemental Appropriations Act, a major legislative measure aimed at providing additional support to individuals and families affected by the ongoing economic crisis. As part of the legislation, a second round of stimulus payments was approved. Each eligible individual could receive up to $600, with qualifying families receiving additional funds for dependent children under the age of 17.
The payments were distributed by the Internal Revenue Service using the most recent tax information available, usually from the 2019 tax year. Payments were sent automatically, primarily via direct deposit and, in some cases, through paper checks mailed to the address on file.
This second payment followed the initial stimulus of up to $1,200 provided under the Coronavirus Aid, Relief, and Economic Security Act passed earlier in April 2020. While the payments were broadly welcomed, the criteria for eligibility created confusion, particularly for temporary residents and international students in the United States.
Payment Amounts and Income Limits
The amount of the second stimulus payment varied depending on filing status, income, and the number of dependents. Individuals earning up to $75,000 in adjusted gross income for 2019 were eligible for the full $600. Married couples who filed jointly and earned up to $150,000 could receive $1,200. For those with dependent children under the age of 17, an additional $600 per child was provided.
The stimulus payment amount was gradually reduced for individuals earning more than $75,000, phasing out entirely at $87,000. For married couples, the phase-out threshold ended at $174,000. The payment was designed to be an advance refundable tax credit, which meant it was not considered taxable income and did not need to be paid back if eligibility was met.
Automatic Distribution Based on Past Tax Returns
A key feature of the payment process was automation. Most people did not need to apply to receive the second stimulus. The IRS relied on existing tax return records to determine eligibility. Individuals who had filed tax returns in 2019 and provided their direct deposit information typically received payments directly into their bank accounts. Others received checks in the mail.
However, this automatic process also contributed to errors. Many people received payments they were not qualified to get, particularly nonresident aliens who had filed tax returns incorrectly. The IRS did not always have the means to distinguish between resident and nonresident filers if the returns were submitted using resident forms.
Who Was Eligible for the Second Stimulus
To qualify for the second stimulus payment, individuals needed to meet several conditions. First, they had to be either a U.S. citizen, a lawful permanent resident, or a resident alien for tax purposes. They were also required to have a valid Social Security Number and could not be claimed as a dependent by another taxpayer.
Residency for tax purposes is determined differently than for immigration status. An individual might be in the country legally on a visa yet still be classified as a nonresident alien for tax purposes. Only those meeting the residency requirements for taxation could lawfully receive the payment.
Other conditions included meeting income limits and filing a 2019 tax return using the appropriate forms. Eligible individuals who received the first payment under the CARES Act were generally also eligible for the second, provided their status had not changed.
Key Differences from the CARES Act
The second stimulus had several differences from the first. Notably, mixed-status families were eligible for the second payment. This means that if one family member did not have a valid Social Security Number but others did, the eligible individuals in the household could still receive their portion of the payment. This was a significant shift from the first stimulus, which denied payments to entire families if even one member was ineligible.
Additionally, the income phase-out thresholds remained the same, but the maximum payment per person was reduced to $600. These updates were intended to broaden access and correct some of the limitations of the original program.
Nonresidents and the Risk of Receiving Payments in Error
Despite clear guidelines, many nonresident aliens received the stimulus payment in error. This usually occurred because they had filed tax returns as residents when they were supposed to file as nonresidents. The most common reason for this mistake was the use of tax software intended for U.S. citizens and residents, which often defaulted to resident forms such as the 1040.
Nonresidents are required to file a different form, the 1040-NR, which reflects their tax status and ensures proper tax treatment. Filing the incorrect form misrepresents the taxpayer’s residency and can lead to the IRS issuing payments they are not entitled to.
This has especially affected individuals in the U.S. on temporary visas, such as students, trainees, and workers under F, J, H, or other nonimmigrant categories. Many of these individuals are ineligible to claim residency for tax purposes, especially if they have not met the Substantial Presence Test.
Tax Residency Determination: Green Card and Substantial Presence Tests
The IRS uses two main tests to determine whether someone is a resident alien or nonresident alien for tax purposes: the Green Card Test and the Substantial Presence Test.
The Green Card Test is straightforward. If you are a lawful permanent resident of the U.S. at any point during the calendar year, you are considered a resident alien for tax purposes.
The Substantial Presence Test is more complex and applies to individuals who do not have a green card. It evaluates how many days you were physically present in the U.S. over the past three years. To pass, you must be in the country for at least 31 days in the current year and a total of 183 days during the current year and the two preceding years, using a specific formula.
However, certain visa categories are exempt from counting days under this test. For example, international students on F-1 or J-1 visas typically do not count days for the first five calendar years of their stay. Therefore, they remain nonresident aliens for tax purposes unless they adjust their status.
What You Should Do If You Received the Payment in Error
If you are a nonresident alien and mistakenly received the second stimulus payment, it is important to take corrective action. The first step is to review your 2019 tax return and confirm whether you filed as a resident or nonresident. If you filed using the standard Form 1040 and were not eligible to do so, you must file an amended tax return.
In addition to correcting your return, you must return the $600 payment to the IRS. Keeping money you are not eligible for could result in penalties, interest, or even negative consequences related to future immigration benefits, including visa renewals or green card applications.
How to Return the Second Stimulus Payment
If you received the payment as a paper check and have not cashed it, the process for returning it is relatively simple. Write the word “VOID” in the endorsement section on the back of the check. Then, include a short note explaining why the check is being returned and mail both items to the appropriate IRS address, which can be found on the IRS website.
If you received the payment through direct deposit or already cashed the check, you must repay the amount using a personal check or money order made out to the U.S. Treasury. Be sure to include your taxpayer identification number, write “Second EIP 2021” on the memo line, and attach a brief explanation of the return.
All repayments must be sent to the correct IRS address based on your state of residence. Sending the payment without the required documentation or to the wrong address may delay processing or lead to further complications.
Importance of Amending Incorrect Tax Returns
If you realize you filed as a resident when you should have filed as a nonresident, filing an amended return is not optional. You must submit a revised return using Form 1040X and switch from the standard Form 1040 to the appropriate Form 1040-NR. This correction ensures your tax records are accurate and may also prevent problems with future government benefits or legal proceedings.
Many individuals who filed incorrectly did so without understanding the consequences. Still, once the error is discovered, amending the return is essential. It also ensures that any refunds, credits, or payments received based on incorrect information are properly addressed.
Why Residency Status Matters in the U.S. Tax Law
The U.S. tax system distinguishes between residents and nonresidents for taxation. While this may seem straightforward, the determination process can be complex. Individuals in the country temporarily, such as students, scholars, and temporary workers, may initially assume that their immigration status aligns with their tax status. In many cases, however, this is not true.
The distinction affects how income is taxed, what forms are required, and eligibility for tax benefits, including stimulus payments. Resident aliens file using Form 1040 and may claim standard deductions and tax credits. Nonresident aliens file Form 1040-NR and are subject to different tax rules.
Filing with the wrong status can trigger unintended consequences. If the IRS believes you are a resident based on your tax return, it may issue benefits you are not qualified for, including the Economic Impact Payments. Identifying and correcting these issues is essential to maintaining compliance.
Determining Residency: The Substantial Presence and Green Card Tests
Tax residency is determined by two criteria: the Green Card Test and the Substantial Presence Test. Passing either test makes an individual a resident alien for tax purposes.
The Green Card Test
If you have been granted lawful permanent resident status at any time during the tax year, you pass the Green Card Test. This status allows you to live and work permanently in the United States. As a permanent resident, you are taxed like a U.S. citizen on your worldwide income.
You continue to be a resident alien for tax purposes unless you formally surrender your status, are judicially declared to have abandoned it, or are determined to be no longer a lawful permanent resident under immigration law.
The Substantial Presence Test
This test applies to individuals who do not have a green card. It uses a weighted formula to count the number of days you have been physically present in the U.S. over a three-year period:
- All days you were present in the current year
- One-third of the days you were present in the previous year
- One-sixth of the days you were present two years prior
To meet the test, you must be in the U.S. for at least 31 days during the current year and 183 days over the total three-year period.
Certain categories of individuals are exempt from counting days toward the Substantial Presence Test. These include:
- Students on F, J, M, or Q visas for the first five calendar years
- Teachers and trainees on J or Q visas for the first two years
- Diplomats and some professional athletes
If you qualify for an exemption, those days are not included in the residency calculation, and you remain a nonresident for tax purposes.
Common Mistakes Made by Nonresidents
One of the most frequent errors nonresidents make is using the wrong tax form. Many use Form 1040, which is reserved for U.S. citizens and resident aliens. This often happens when individuals use general tax software that defaults to resident status and does not account for visa type or length of stay.
Filing as a resident when you are not eligible can lead to the IRS issuing tax credits, refunds, or stimulus payments you should not receive. It may also affect how much tax you pay on U.S.-sourced income and whether you’re taxed on foreign income.
Another common error is claiming tax benefits not available to nonresidents, such as the Earned Income Tax Credit or the Recovery Rebate Credit. These credits are typically not available to nonresident aliens unless they meet very specific criteria.
What to Do If You Filed as a Resident by Mistake
If you discover that you mistakenly filed as a resident when you should have filed as a nonresident, it is important to amend your return as soon as possible. This involves completing Form 1040X, which allows you to correct previously submitted tax information, and attaching a corrected Form 1040-NR.
Amending your return not only corrects your tax record but also allows you to return any payments you were not entitled to, such as the second stimulus check. It also helps avoid future issues with the IRS and supports immigration compliance.
Steps to Amend Your Tax Return
The amendment process involves multiple steps and requires careful attention to detail. Below is a breakdown of what you need to do:
Step 1: Review Your Original Tax Return
Locate the tax return you filed for the year in question, usually 2019 if you received the second stimulus payment in early 2021. Check whether you used Form 1040 instead of Form 1040-NR and whether you claimed any credits or deductions you were not eligible for as a nonresident.
If your original return was prepared using software not designed for nonresidents, there is a strong chance it was incorrect.
Step 2: Determine Your Correct Residency Status
Evaluate your presence in the United States using the Green Card Test or Substantial Presence Test. Account for any exempt days due to your visa category. If you do not meet the criteria for tax residency, you must file as a nonresident and submit Form 1040-NR.
Step 3: Prepare Form 1040X
Form 1040X is the standard IRS form used to amend tax returns. It includes three columns:
- Column A: Original amounts reported
- Column B: Changes you are making
- Column C: Corrected amounts
You must clearly explain each change in Part III of the form. For example, you might state that you incorrectly filed as a resident and are now submitting a nonresident return along with the corrected information.
Step 4: Complete a New Form 1040-NR
Alongside the amendment, you must fill out Form 1040-NR with the correct information. This form is specific to nonresident aliens and has different requirements for reporting income, deductions, and treaty benefits.
Make sure your corrected return reflects only income effectively connected with U.S. sources and does not claim deductions or credits unavailable to nonresidents.
Step 5: Submit the Amended Return
Mail your completed Form 1040X and attached Form 1040-NR to the IRS address provided in the form instructions. Be sure to keep a copy for your records. You may not e-file an amended return in this situation, as 1040-NR forms are generally not eligible for e-filing.
If you are returning a stimulus payment, you may also need to submit a personal check or money order with your amended return. Include your taxpayer identification number and a brief note explaining the reason for repayment.
What If You Already Filed an Amended Return?
If you already submitted an amended return and still received the second stimulus payment, it is likely that the IRS had not yet processed your correction. IRS processing times for amended returns can be lengthy, often taking several months.
In such cases, do not submit another amended return. Instead, proceed with returning the stimulus payment separately using a personal check or money order made payable to the U.S. Treasury. Include your taxpayer identification number and a clear explanation of why the payment is being returned. Returning the funds promptly, even while your amendment is being processed, demonstrates your intent to remain in compliance with U.S. tax law.
Avoiding Future Filing Errors
To prevent similar issues in the future, it is essential to take the following steps:
Know Your Residency Status Before Filing
Use the Green Card and Substantial Presence Tests each year to determine whether you are a resident or nonresident for tax purposes. These determinations may change annually depending on your visa status and how much time you have spent in the U.S.
Use the Correct Tax Form
Only residents and citizens should use Form 1040. Nonresidents must use Form 1040-NR. Filing the wrong form can result in incorrect tax outcomes and unintentional receipt of payments.
Do Not Claim Ineligible Tax Credits
Many credits and deductions available to residents are not available to nonresidents. These include the Earned Income Tax Credit, standard deduction (except in limited treaty cases), and child tax credits. Always consult tax instructions carefully to confirm what is allowable.
Track IRS Communications
If you receive notices, refunds, or payments from the IRS that seem unexpected, investigate promptly. Retain copies of all correspondence and maintain organized records of your filings.
What Happens if a Nonresident Keeps the Stimulus Payment?
The Economic Impact Payments were distributed by the IRS as part of an advance tax credit. The payment was not treated as regular income but as a refundable credit applied against the taxpayer’s future tax liability. While the IRS did not initially require repayment of the first or second stimulus payment from ineligible recipients unless they received it due to fraud or intentional misrepresentation, this does not mean the issue can be ignored indefinitely.
Nonresidents who received the second stimulus payment in error due to misfiling or misrepresentation may face several consequences, including:
- Potential audits and IRS enforcement actions
- Accrual of penalties and interest if repayment is required
- Immigration complications, including impacts on future visa or green card applications
- Risk of being labeled as non-compliant with U.S. tax law
These outcomes can be serious, especially for individuals who plan to remain in the U.S. long-term or return at a later date. Tax compliance history plays a role in various legal and administrative procedures, and accepting a payment in error may create a negative record.
IRS Penalties and Enforcement Actions
The IRS has multiple tools at its disposal for enforcing compliance. These include penalties for inaccurate returns, interest on unpaid liabilities, and fraud investigations. If a taxpayer knowingly keeps a payment they were not entitled to and does not take corrective action, the IRS may treat the act as willful noncompliance.
Even if the payment was received by mistake, not returning it once you are aware of your ineligibility could be seen as negligent behavior. The longer the error goes unaddressed, the greater the risk of enforcement becomes. Individuals may be subjected to tax penalties, ranging from simple fines for underpayment to more serious penalties for filing false information.
Moreover, if the IRS audits a taxpayer’s return and discovers discrepancies related to residency status, improper claims of tax credits, or unjustified receipt of stimulus funds, additional reviews of other years’ filings could be initiated.
Immigration Risks of Keeping an Improper Payment
Beyond financial penalties, one of the most significant risks for nonresident aliens is the impact on immigration status. U.S. immigration authorities often review tax compliance when evaluating applications for visa renewals, green cards, and even citizenship. A record of having accepted government funds without eligibility could raise questions about honesty, intent, and respect for U.S. laws.
Immigration officers may consider the failure to return an ineligible payment as a form of misrepresentation. This could result in:
- Denial of a visa or status extension
- Delay or denial of adjustment of status or green card application
- Denial of naturalization for failing to meet the requirement of good moral character
Even a small amount like $600 can carry significant weight if it reflects broader issues related to lawful behavior and truthfulness in official dealings. Immigration authorities may also compare tax filings with visa type and duration of stay to verify that individuals have consistently maintained both legal and tax obligations.
How the IRS May Discover the Error
Many people assume that small errors may go unnoticed, but the IRS processes millions of records annually and cross-references information from various sources. Several scenarios could alert the IRS to an improper payment:
- A tax return shows residency status inconsistent with visa records
- An individual later files a nonresident return, revealing the earlier return was incorrect
- A discrepancy is flagged during an audit or review
- Data is matched from employer records, visa classifications, and international travel history
Once the error is discovered, the IRS may initiate contact through a formal notice requesting repayment. If ignored, further action can follow, including assessment of penalties or referral for further review.
Importance of Returning the Payment Voluntarily
If you have received a payment you now understand you were not entitled to, the most responsible and beneficial action is to return it voluntarily. Returning the payment demonstrates intent to comply with tax law and reduces the likelihood of harsher penalties later. It may also help support your record of good moral character, which is important for immigration and legal matters.
To return the payment:
- If the payment was received as a check and has not been deposited, write void on the back and include a brief explanation.
- If the payment was already deposited or cashed, send a personal check or money order to the U.S. Treasury with your taxpayer identification number and an explanatory note.
- Use the appropriate IRS mailing address, which can be found on the IRS official website based on your location.
Sending the payment with clear documentation helps ensure that it is processed correctly and that your account is updated accordingly.
Examples of How Misfiling Occurs
Many nonresidents mistakenly receive the stimulus payment because of filing errors. For example, international students or temporary workers using standard tax software may incorrectly file Form 1040 instead of the correct nonresident form. These platforms are often designed for U.S. citizens and residents and do not always screen for visa status or eligibility criteria.
Such a misstep can result in the IRS interpreting your return as indicating you are a resident for tax purposes. The automatic payment systems then process your file as eligible, even if you legally do not meet the requirements. This is why so many individuals received stimulus checks without realizing their ineligibility. Correcting such an error involves amending your return with Form 1040X and submitting a corrected Form 1040-NR, along with repayment if necessary.
Actions to Take if You’re Still Unsure About Eligibility
If you’re uncertain about whether you were eligible for the second stimulus payment, several steps can help clarify your status:
- Review your visa category and duration of stay in the U.S.
- Calculate your residency status using the Substantial Presence Test
- Check whether you filed the correct tax form for your status
- Examine whether you claimed tax credits available only to residents
If, after completing these steps, it becomes clear that you were not a resident for tax purposes and incorrectly received a payment, proceed to amend your return and return the funds. If you remain unsure, it is advisable to consult a tax professional with experience in international taxation. Proper guidance can prevent further complications and help ensure that you follow the correct procedure.
How to Handle IRS Notices Regarding the Stimulus
In some cases, the IRS may contact you about the payment. This can occur even after you have amended your return or returned the funds. Common types of notices include:
- Request for repayment due to ineligibility
- Notice of changes to your return based on IRS adjustments
- Notification of penalties or interest due
If you receive a notice, review it carefully and respond promptly. Ignoring official communication from the IRS can lead to increased penalties and interest. Keep copies of all correspondence, checks, and proof of mailing when you return funds or submit forms.
You may need to include supporting documents such as:
- A copy of your corrected tax return
- Proof of your visa status and dates of presence in the U.S.
- Documentation showing the payment was returned
If you have already taken steps to correct the issue and receive a notice afterward, it may simply be a matter of timing. IRS processing can take weeks or months, so you may receive a notice before your amended return or payment has been processed. Continue monitoring the situation and follow up if necessary.
Importance of Record-Keeping for Nonresidents
Good record-keeping is essential for all taxpayers but especially important for nonresidents. Immigration and tax matters often intersect, and having clear records can help in defending your actions if questions arise.
Keep copies of:
- All tax returns and amendments
- Forms showing visa classification and dates of entry or exit
- Communication with the IRS
- Checks or money orders used to return funds
- Explanatory notes and submission receipts
Having organized records can make a significant difference in case of audit, immigration interviews, or legal reviews. It can also reduce the time and effort needed to resolve any problems that arise.
Staying Compliant as a Nonresident
Remaining compliant with U.S. tax obligations is not just about paying the correct amount of tax. It involves understanding your responsibilities based on your visa, residency status, and income sources.
To stay compliant:
- Verify your residency status annually
- File the correct tax forms each year
- Return any government payments received in error
- Respond to IRS correspondence in a timely manner
- Keep thorough documentation of your tax and immigration records
Taking these actions consistently reduces your risk of penalties and improves your standing for any future interactions with U.S. agencies.
Conclusion
The second round of Economic Impact Payments, issued in late 2020 and early 2021, was intended to support eligible U.S. residents during the financial hardships of the pandemic. However, due to system limitations and filing errors, many nonresident aliens and other ineligible individuals received the $600 stimulus payment in error. This has caused confusion and concern for thousands of people, particularly those in the U.S. on temporary visas or who have since left the country.
Understanding the eligibility requirements is critical. The payments were designed only for U.S. citizens, green card holders, and tax residents who met specific income and identification conditions. Nonresident aliens, undocumented immigrants, and individuals filing incorrectly were not legally entitled to receive this financial support. Mistakenly receiving a payment does not automatically protect a person from future penalties or immigration complications.
For those who received the payment in error, taking proactive steps to amend past tax filings, confirm residency status, and return the funds is the most responsible path forward. Ignoring the issue can lead to audits, fines, and even negative impacts on immigration status. The IRS has mechanisms to identify errors, and holding on to a mistaken payment may be seen as intentional noncompliance, especially if no corrective action is taken.
Correctly filing as a nonresident, using the appropriate tax forms, and returning any ineligible payments helps preserve financial and legal integrity. It also supports future plans to study, work, or immigrate to the U.S. Transparency and honesty in tax matters are viewed positively by both tax authorities and immigration officials.
In a global economy where people frequently move between countries, it’s more important than ever to understand how tax law interacts with immigration and financial regulations. Being informed, taking action when needed, and maintaining full compliance with U.S. tax obligations not only avoids penalties but also builds a foundation of trust with U.S. institutions. For anyone uncertain about their tax or residency status, seeking accurate information and taking early steps can prevent long-term issues and ensure peace of mind.