Economic stimulus payment for a resident alien

Question

Let me mention first that I was a non-resident alien for tax years 2018 and 2019, and I am considered a resident alien for 2020 taxes. Today I have received a stimulus payment check because I have mistakenly filed form 1040 (instead of 1040 NR) for 2018 taxes - I have amended 2018 taxes when I paper filed 2019 taxes. I understand from IRS website that I will eligible to ask for the stimulus check when I am doing my taxes for 2020 since I am a resident alien for this year. I need an advice on whether I should use this check right away or wait and ask for it when doing my taxes for 2020. I am copying the information fro the IRS website below highlighting the most relevant text in italic:

Q33. Will I get the Payment if I am not a U.S. citizen, U.S. permanent resident, or a resident of these territories? A33. U.S. resident aliens with a valid SSN are eligible for the Payment if they can’t be claimed as a dependent of another taxpayer. Determine if you are considered a U.S. resident alien at Aliens – Which Form to File. If you are eligible to file Form 1040 or Form 1040-SR like U.S. citizens for 2019, including by filing a joint federal tax return with a U.S. citizen or U.S. resident alien spouse, file Form 1040 or Form 1040-SR with the IRS for 2019 even if your income isn’t enough to require you to file a tax return. You don’t need to take any action if you already filed a Form 1040 or Form 1040-SR for 2019 or 2018.

> If you are considered a U.S. resident alien for 2020 but not for 2019, you can claim the Payment when you file Form 1040 or Form 1040-SR with the IRS for tax year 2020.

If you are considered a U.S. resident alien for 2019 but not for 2020, you won’t be required to repay the Payment we paid in 2020 based on your Form 1040 or Form 1040-SR for tax year 2019.

Answer 1

My understanding is that you will have to return the payment because it was based on an incorrectly filed 2018 or 2019 tax return, and you do not qualify for the payment based on the correctly filed 2018 or 2019 tax return.

And then, later, when you file your 2020 tax return, if you indeed are a resident alien and meet all the other conditions (including being below the income limit, which you do not know will be true right now), you will be able to claim the payment as a tax credit, since you would not have received any advance payment based on the correctly filed 2018 or 2019 tax return, which is the end result of your amending your tax returns and returning the payment.

You cannot just say, hey, I keep the erroneous extra refund for this year's tax return, and don't claim the credit for next year, and it will just cancel out, right? You can't do that. The IRS can later come in and audit the first year, discover that it was incorrect, and ask you to pay, but they don't have to audit the second year, and don't have to give you the tax credit in the second year back, because it was your responsibility to claim it in the first place.

Answer 2

You can keep it.

The stimulus is a tax credit for the 2020 tax year. The IRS is using 2018 and 2019 tax returns to estimate how much individuals will receive as the credit on their 2020 tax returns (typically filed in the spring of 2021), and are using those estimates to give an advance on the payment.

From Newsweek:

"The Economic Impact Payment is a credit that will be calculated on the 2020 Individual Income Tax Return and will be reduced for any advances received, which are the payments being released now," David M. Kaplan, principal at the accounting firm Bernard Robinson & Company, told Newsweek.

As a resident alien for tax year 2020, you will be eligible for the tax credit when you file next spring. Therefore, you can keep the advance that you just received.