The Trump administration has unveiled a proposal requiring all tax filers to declare their citizenship and work authorization status directly on annual IRS forms, a move officials say could prevent up to $2 billion in improper federal benefit payments to illegal immigrants.
New Requirements on Tax Forms
The IRS released draft versions of the 2026 Form 1040 in late August featuring a new question asking filers and their spouses whether they are U.S. citizens, U.S. nationals, or aliens lawfully authorized to work in America. The question appears with simple yes and no checkboxes. A similar requirement shows up on Schedule 3-A, the form used to claim refundable tax credits. Taxpayers must certify their status under penalty of law to file their returns.
Treasury Department officials stated the measure targets illegal immigrants who claim refundable tax credits including the Earned Income Tax Credit and the Additional Child Tax Credit, which provide cash refunds to qualifying low- and middle-income workers and families. Officials declined to specify whether collected citizenship data would be shared with immigration enforcement agencies for arrest and deportation purposes, saying only that information would be subject to privacy and legal protections.
Impact on Current Taxpayers
While illegal immigrants cannot legally work in America, they contribute substantial tax revenue. In 2024, the National Taxpayer Advocate documented 3.8 million tax returns filed using Individual Tax Identification Numbers rather than Social Security numbers. These filers paid $14.4 billion in income taxes plus $6.5 billion in Social Security and Medicare taxes, despite being generally ineligible to collect Social Security benefits themselves.
The administration invokes the Personal Responsibility and Work Opportunity Reconciliation Act, which governs benefit program eligibility, as justification for applying similar standards to refundable tax credits. However, the policy would eliminate benefits for some currently legal recipients including DACA recipients, temporary protected status holders, and H1-B visa workers. Research published this week estimates 671,000 people, including 309,000 children, would lose Earned Income Tax Credit eligibility, while another 1.1 million people, including 574,000 children, would lose access to the Additional Child Tax Credit.
Existing Safeguards and New Standards
Current law already requires valid Social Security numbers for Earned Income Tax Credit claims, with the IRS verifying each number against Social Security Administration records. The new proposal extends restrictions beyond existing safeguards by applying welfare eligibility standards to tax credits, fundamentally changing how the government treats certain refundable credits in the tax code.