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I am a non-resident alien who working in the US. I received the CARES payment ($1200) of the COVID 19 by direct deposit from IRS, while I know that as a non-resident, I am not eligible to receive. This is because I filed the incorrect 1040 tax form to IRS before instead of the 1040NR for non-residents and have not filed the amended form yet. I understand that I must return this payment to IRS. I found the way to return here https://www.irs.gov/taxtopics/tc161. However, during the COVID-19 time, I could not call to IRS as stated in the post. So what should I do now? Thank you.

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    Could you clarify what you mean by "could not call to IRS"? If it is a temporary inability to reach them, follow the remaining instructions, and keep calling them until you succeed.
    – Doug Deden
    Apr 22 '20 at 19:09
  • Hi, on IRS website, they state that Telephone Assistance: IRS live phone assistance is not available at this time. Apr 22 '20 at 21:01
  • Well, at the very least, you will need to amend your 1040 to a 1040NR. The form 1040X instructions has information on how to do that.
    – user102008
    Apr 25 '20 at 21:21
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Although the mentioned page -- https://www.irs.gov/taxtopics/tc161 -- is about erroneous tax refunds, it seems like a great place to start.

As recently as this morning, the IRS's telephone and local assistance page indicated that while local offices were closed, live phone assistance was still available. But that is no longer the case.

Telephone Assistance: IRS live phone assistance is not available at this time. Please look for help first here on IRS.gov.

I see two three options.

Option 1. Wait

Wait until the IRS phone lines open back up, and then go through the steps from the tc161 page.

  1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
  3. Interest may accrue on the erroneous refund.

(Because the page is about refunds, item three indicates that interest may apply to erroneous tax refunds. But it is not clear if interest applies to erroneous stimulus payments.)

Option 2. Step 1 now, Step 2 later

Follow step 1 above right now to ensure that the money goes back as soon as possible, to avoid or minimize any interest. Follow step 2 as soon as the IRS phone lines open back up.

According to a Kiplinger article, the IRS will also send you a paper confirmation.

However, the IRS is legally required to send you a notice within 15 days of mailing your check (or directly depositing the money into your bank account) to let you know the method of payment, the amount of payment, and an IRS phone number to call if you didn't receive your payment. So, once you receive the notice, you can call to let the IRS know the amount of your check is wrong. You'll just have to sit tight until then, though.

The IRS will mail the notice to your last known address it has on file. If you have recently moved, you should file a Form 8822 with the IRS and a change of address notice with the U.S. Postal Service right away so that the notice is sent to your new address.

That notice might include additional phone numbers that are not shut down, or it might contain alternative ways to contact the IRS about erroneous stimulus payments. So you could also wait for that paperwork to arrive. Or you could do step 1 now and use that paperwork for an alternative point of contact for step 2 when it arrives.

Option 3. You might be able to keep it!

According to this MarketWatch article:

The statutory language in the CARES Act that set the whole EIP scheme in motion says that anybody who gets more money than they are actually entitled to can keep the excess.

I haven't found a primary source for that yet, but if it is true, it could mean that you could keep the payment that you have already received. I imagine the IRS would challenge you if they believed that your mistaken payment was the result of fraud. But if it was an honest mistake, the MarketWatch article makes me think you can keep it.

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  • Option 3 is not correct. The quoted sentence is very misleading and incorrect. It is not true that "anybody who gets more money than they are actually entitled to can keep the excess." What they're trying to describe is how the check (based on the 2019 or 2018 tax return) affects the 2020 tax credit, where if you qualify for more in 2020, you receive the difference, but if you qualify for less, you don't have to pay anything back. So if you assume that the check is an "advance" of the 2020 tax credit, then it seems like you got more than you are "entitled to", and you get to keep the excess.
    – user102008
    May 3 '20 at 6:22
  • But that is not actually what the law says. The law says that the check (advance refund) eligibility and amount are based on eligibility and amount of the tax credit if it were applied to the 2019 tax year (or 2018 tax year if you hadn't filed for 2019), so if you correctly filed your 2019 (or 2018) tax return, and they gave you the check amount based on that, you got the check amount that you were entitled to. Even if you got much higher income in 2020 or became ineligible in 2020, that does not change the fact the eligibility and amount for the check. 2020 tax year does not factor into it.
    – user102008
    May 3 '20 at 6:25
  • The fact that you don't have to pay it back even if you qualify for less in 2020 arises from a surprising asymmetry in the law, where the 2020 tax credit is reduced by the amount of the check you got, but not reduced below 0, so you get more if you qualify for more, but you don't give up any if you qualify for less. This is what people mean when they say you "keep the excess", but it's not an "excess" in the sense that it was an overpayment -- it is only an excess of what you correctly received based on one tax year, over what you qualify for in another tax year.
    – user102008
    May 3 '20 at 6:31
  • However, if you filed your 2019 (or 2018) tax return incorrectly, as the OP did, and received a bigger check based on that than if you filed your tax return correctly, then that is a different situation. Here, you are really "not entitled" to the amount, and you need to pay back that money after amending your tax return. This is a separate issue from the issue of reducing the 2020 tax credit. Here, it's an incorrect refund based on an incorrect 2019 tax return, and needs to be handled along with the correction of the 2019 tax return, not with 2020 taxes.
    – user102008
    May 3 '20 at 6:36

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