Former J1 students have received emergency Covid-19 payments from the US government which if not rectified could threaten their ability to return to the country, a tax advisory company has said.
The situation potentially affects thousands of people who held the popular summer travel visas as well as international students.
The service website taxback.com said it had become aware of the error from its education and visa partners and warned that those affected must ensure they are tax compliant “if you want to go to the States again”.
A spokeswoman told the Irish Times that such tax issues would be raised during a visa application process for entering the country.
It is unclear how many Irish recipients there have been of the one-off $1,200 (€1,100) payment but that the issue is “relatively widespread” according to the company.
Payments are deposited in bank accounts as part of the US Cares (Coronavirus Aid, Relief and Economic Security) Act, a stimulus package designed to support workers earning less than $75,000 (€69,100) per year during the pandemic.
According to taxback.com approximately 14,000 J1 visas were issued to Irish people in 2018/2019 and approximately 1,000 visas to study in the country.
“This issue is relatively widespread and could have further ramifications for those looking to travel to the US in the future,” it said.
The spokeswoman added that it had been “inundated with questions from people who discovered they received the payment in error” and that in the last week it had assisted in preparing more than a thousand returns.
In the coming weeks, paper cheques are also expected to be issued to US addresses where J1 students no longer live.
The Union of Students Ireland (USI) has advised anyone who had J1s in the period to ensure they are not affected.
The Internal Revenue Service (IRS), the US tax authority, did not immediately respond to requests for comment.
How to rectify
Laura Mc Hugh, marketing manager at taxback.com, said it had been receiving queries from concerned parties regarding non-residents receiving the payment.
“In the last week people are finding funds in their US bank accounts and are questioning why they are there,” she said in a statement issued on Tuesday.
“While this has come to the attention of some former students and J1-ers, we are advising the thousands of others that could be affected to check their US bank account, which may now be dormant, to see if they have received this payment.”
According to the company, those entitled to the payment include permanent residents, and residents for tax purposes who have a Social Security Number (SSN) and who have filed their 2018 tax return in 2019, or their 2019 return in 2020. However, non-resident aliens are not eligible.
Ms McHugh explained that it is not uncommon for J1-visa holders who have spent a summer in the US to mistakenly file their tax return as a resident, an error that may lead to the Covid payment being automatically lodged in their account.
“Anyone who finds themselves in this situation should act to rectify it in two ways - firstly, by sending an email to the IRS to flag receipt of the payment and by refunding the money to the IRS (Internal Revenue Service),” she said.
The situation for students who had been studying in the country during 2018 and 2019 was less clear with further directions required from the IRS.
“Whether the IRS will look to recoup this money in the coming months remains to be seen, though there is precedence for this,” Ms McHugh said.
