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From the IRS guidance on eligibility for the Third Economic Impact Payment (covid/coronavirus relief):

A person who’s a qualifying resident alien with a valid SSN is eligible for the payment only if he or she is a qualifying resident alien in 2021

I will be a Dual-Status Alien for 2021, when I come to file 2021 taxes in early 2022. Specifically, I began 2021 as a Resident Alien, and will end it as a Non-Resident Alien.

Given that status as an assumption (I'm not asking about how to determine my status): am I allowed to keep the third stimulus check, or should I follow the instructions to return it? I have received the check but not deposited it yet.

If relevant: my Residency Termination Date for 2021 Dual-Status taxation purposes, is earlier than March 13, 2021 (the date the American Rescue Plan Act became law). But I don't know if this sequence of events matters for the eligibility.

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  • How did you determine that you are a dual-status alien for 2021? Do you pass the Green Card Test or Substantial Presence Test for 2021? If so, you are generally a resident alien for all of 2021; otherwise, you are generally a nonresident alien for all of 2021. If you are a resident alien for 2021 and nonresident alien for 2022, you can choose an earlier residency termination date if you have a closer connection with a foreign country at the end of 2021, and filed a statement with the IRS. Will you file this statement?
    – user102008
    May 12 at 18:48
  • @user102008 To reiterate, this question is not about my status, it is about EIP eligibility given the unusual status. However, since you ask, yes, I will be a Dual-Status Alien for exactly the reason you describe. I will be filing such a statement with my 2021 returns. May 12 at 21:18
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There are two issues here: 1) whether dual-status aliens are eligible, and 2) are people who were eligible for 2020 (or 2019, whichever year was used to determine eligibility for the third stimulus check) but not eligible for 2021, who got the third stimulus check, required to return it? I will try to answer both of these according to my interpretation of the law. (If the answer to #1 is that they are eligible, then #2 doesn't matter for your case, but I would like to address it anyway.) I will focus on the third stimulus check since that's what's asked about in the question, but the text of the law for all three rounds of stimulus are similar, so the answers will likely apply to all three.


First, let's consider whether dual-status aliens are considered eligible individuals for the stimulus tax credit and the advance refund (the check). The law for the third stimulus check is 26 USC 6428B, as added by section 9601 of the American Rescue Plan Act (text here). Subsection (c)(1) says:

(c) Eligible individual.—For purposes of this section, the term ‘eligible individual’ means any individual other than—

(1) any nonresident alien individual,

[...]

So the question is whether a dual-status alien is a nonresident alien. 26 USC 7701(b) deals with the definition of resident and nonresident aliens. Specifically, in subsection (b)(1)(B), nonresident alien is defined as:

An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A)).

Now, if you look at subsection (b)(1)(A), it says that a resident alien is anyone who passes the Green Card Test, Substantial Presence Test, or makes the First Year Choice. There are special rules for first year of residency and last year of residency, as provided in subsection (b)(2), which can make someone treated as a resident for only part of the year (i.e. dual-status alien). However, a prerequisite of all of those first year and last year rules is that the person must be a resident as defined in subsection (b)(1)(A). So in order for you to be a dual-status alien, you must first pass one of the tests to be a resident in subsection (b)(1)(A), and if you do, then I believe, you are not a "nonresident alien" under subsection (b)(1)(B), since that definition specifically refers to not a resident "within the meaning of subsection (b)(1)(A)", so it should not take into account the other meanings of resident, including the modifications in subsection (b)(2).

Therefore, I believe dual-status aliens are considered eligible individuals for the stimulus. For people who were nonresident at the beginning of the year and resident at the end, they file their tax return on 1040, with a statement for the nonresident part, so they would naturally be processed as a resident due to filing 1040, and they would be able to claim the Recovery Rebate Credit on 1040. However, for people who were resident at the beginning of the year and nonresident at the end, they file their tax return on 1040-NR, with a statement for the resident part, so I am not sure how the IRS would process them as resident, and I am not sure how they would claim the Recovery Rebate Credit since it cannot be claimed on the 1040-NR.


Now let's consider whether someone who was an eligible individual for the past tax year (2020 or 2019) that was used to determine eligibility for the stimulus check, and who received the check, is entitled to that stimulus check if they are not an eligible individual for 2021.

Going back to 26 USC 6428B, as added by section 9601 of the American Rescue Plan Act (text here), subsection (g)(1), which deals with the advance refund, describes a fictitious overpayment for people who would have been eligible for the credit for the 2019 tax year:

(1) IN GENERAL.—Subject to paragraphs (5) and (6), each individual who was an eligible individual for such individual’s first taxable year beginning in 2019 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.

(Subsection (g)(5) provides for replacing the 2019 tax year with 2020 for those who have filed 2020 tax returns before the initial payment determination date.) The advance refund amount is provided in subsection (g)(2)(A):

(A) IN GENERAL.—For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such taxable year if this section (other than subsection (f) and this subsection) had applied to such taxable year

And subsection (g)(3) provides for this fictitious overpayment amount to be refunded as soon as possible (i.e. sent as a check or direct deposit):

(3) TIMING AND MANNER OF PAYMENTS.—The Secretary shall, subject to the provisions of this title and consistent with rules similar to the rules of subparagraphs (B) and (C) of section 6428A(f)(3), refund or credit any overpayment attributable to this subsection as rapidly as possible, consistent with a rapid effort to make payments attributable to such overpayments electronically if appropriate. No refund or credit shall be made or allowed under this subsection after December 31, 2021.

Note that in (g)(1) and (g)(2), both the eligibility and amount for the advance refund are based on the person's 2019 (or 2020) tax year (e.g. it says "each individual who was an eligible individual for such individual’s first taxable year beginning in 2019"). So if you were an eligible individual for the 2019 (or 2020 if you filed before the determination date), then you meet the qualifications for the refund. Nothing in the text of the law requires you to be an eligible individual for 2021 to be eligible to receive or keep the advance refund. You also would not have to pay back any amount with your 2021 tax return, because subsection (f)(1) provides that the Recovery Rebate Credit cannot be reduced below 0:

(1) REDUCTION OF REFUNDABLE CREDIT.—The amount of the credit which would (but for this paragraph) be allowable under subsection (a) shall be reduced (but not below zero) by the aggregate refunds and credits made or allowed to the taxpayer (or, except as otherwise provided by the Secretary, any dependent of the taxpayer) under subsection (g). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).

So it is my opinion that, if you were a resident alien for 2019 (or 2020 if you filed before the determination date), and you received a stimulus check based on that, even if you are a nonresident alien for 2021 (completely a nonresident alien, not just dual-status), the amount you received was still correct and you do not need to return any of it.

I am aware that in this IRS's FAQ on the third stimulus check, it says that if you are a nonresident alien for 2021, you are not eligible for the check and have to return it:

Do I qualify for the third payment if I’m a resident alien? (added March 26, 2021)

A person who’s a qualifying resident alien with a valid SSN is eligible for the payment only if he or she is a qualifying resident alien in 2021 and may not be claimed as a dependent of another taxpayer. A nonresident alien in 2021 isn’t eligible for the payment. An alien who received a payment but isn’t a qualifying resident alien for 2021 should return the payment to the IRS by following the instructions as described in Returning the Economic Impact Payment for instructions.

However, this seems to be inconsistent with the text of the law, which says that the eligibility and amount of the advance refund are based on your 2019 (or 2020) tax year, and does not depend on your 2021 tax year. Unless and until someone shows me a credible legal reasoning based on the text of the law or court rulings that support this IRS answer, it is my belief that this IRS answer is wrong.

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