IRS mistakenly sends stimulus checks to foreign workers

[sureshkonda]

Thousands of foreign workers, many living overseas, are receiving stimulus checks designated for U.S. residents due to an unforeseen glitch that funneled taxpayer dollars to other countries, according to tax consultants and the recipients themselves.

College-age workers who spent time in the U.S. in the last two years — some of whom returned home long before the coronavirus pandemic — have been surprised to find $1,200 checks deposited into their bank accounts. And with no clear guidance on how to return it, they’re holding onto the money or racing to spend it before the Internal Revenue Service realizes the mistake.

The incorrect payments were likely distributed to thousands of foreigners in April, said Donna Kepley, president of the tax firm Arctic International who has spoken with dozens of clients over the past two weeks. The error stems from a common tax-filing blunder, particularly for those on F-1 student and J-1 exchange visas. These workers, studying at universities and working summer jobs, often turn to TurboTax and other e-filing systems without knowing that the systems are designed only for U.S. residents.

As a result, many temporary foreign workers each year file the wrong tax forms. The IRS rarely catches the error because nonimmigrant workers’ Social Security numbers have the same number of digits as those of U.S. citizens, and therefore appear to be identical, accountants say.

Usually, the error doesn’t much matter, but this year it’s causing the IRS to think certain foreign workers are eligible for one-time stimulus payments. The glitch affects both workers in the U.S. and those who recently left the country.