The Trump administration has put forth a proposal that would mandate U.S. taxpayers to declare their citizenship and work authorization status on the annual tax form, Form 1040, which nearly all wage earners submit each year.
According to the administration, this proposed requirement is intended to assist federal authorities in preventing individuals who are not authorized to reside in the country from accessing federal benefits for which they do not qualify. Officials suggest this measure could potentially save taxpayers as much as $2 billion.
New Disclosure Requirements on Tax Forms
The Internal Revenue Service (IRS) released a draft of its 2026 Form 1040 in late August, which includes a new inquiry: "At the time you file your return, are you, and your spouse if filing jointly, a U.S. citizen, U.S. national, or an alien lawfully authorized to work in the U.S.?" This question provides "Yes" and "No" checkboxes for both the primary filer and their spouse.
Additionally, a draft of Schedule 3-A, a form utilized for claiming refundable tax credits, incorporates a similar question regarding status.
Under the conditions of this proposal, every individual filing a tax return would be compelled to certify their immigration or citizenship status to the IRS under penalty of law as a prerequisite for submitting their return.
The Treasury Department stated that the objective of this new question is to preclude individuals without legal authorization from exploiting refundable tax credits such as the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). These credits are typically available to low- and middle-income workers and families and often result in a tax refund for eligible filers.
A Treasury official indicated in a statement that the information gathered would be "subject to a variety of privacy, disclosure and other legal protections." However, the statement did not clarify whether this information would be shared with federal immigration enforcement agencies for the purpose of identifying individuals for arrest and deportation.
Current Tax Contributions and Eligibility
Despite not being authorized to live and work in the United States, individuals without legal status do contribute to the tax system. For instance, these individuals frequently pay into Social Security but are generally unable to collect Social Security benefits unless they meet specific federal eligibility criteria later on.
A 2024 analysis by the National Taxpayer Advocate identified 3.8 million tax returns filed by individuals using an Individual Taxpayer Identification Number (ITIN). ITINs serve various purposes, including enabling undocumented workers who cannot obtain a Social Security number to fulfill their tax obligations.
Data from the IRS reveals that taxpayers submitting these nearly 4 million returns collectively paid $14.4 billion in income taxes and an additional $6.5 billion in Social Security and Medicare taxes.
To qualify for the Earned Income Tax Credit, a valid Social Security Number is mandatory, meaning workers who only possess an ITIN are ineligible. The IRS verifies Social Security Numbers against records from the Social Security Administration for every EITC claim.
Generally, individuals without legal status are not eligible for federal benefits. Eligibility for refundable tax credits is determined by federal tax law and immigration status. Current law typically requires a valid Social Security number for the Earned Income Tax Credit, while eligibility for the Additional Child Tax Credit varies based on specific statutory requirements. The Trump administration's initiative seeks to further restrict eligibility by applying standards from the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) to certain refundable tax credits.
Widespread Impact and Criticisms
The Trump administration asserts that the Personal Responsibility and Work Opportunity Reconciliation Act, which outlines eligibility for various benefit programs, should also extend its criteria to refundable tax credits.
However, the proposed policy change would render some individuals currently eligible for these credits ineligible. This includes those protected under the Deferred Action for Childhood Arrivals (DACA) program from the Obama administration, individuals with temporary protected status (TPS), and temporary workers holding H1-B visas.
A research paper released this week estimates that if implemented, the proposal would result in 671,000 individuals, including 309,000 children, losing access to the Earned Income Tax Credit. Furthermore, an estimated 1.1 million people, comprising 574,000 children, would lose the Additional Child Tax Credit.
The majority of children who would become ineligible for these credits are U.S. citizens, their status derived from the citizenship or immigration status of at least one of their parents, according to researchers from Boston University, Columbia University, and the Institute on Taxation and Economic Policy.
Opponents of the new policy view it as an additional data point for the federal government on taxpayers. Undocumented individuals would face a difficult decision: either declare their unlawful presence on a tax return, potentially marking them for immigration-related arrests, or commit a felony by providing false information on the return.
Some individuals without legal status might choose a third path, opting to cease filing their taxes altogether.
"It could be used as an immigration enforcement tool and that is probably the reason why they are doing this," David Bier, director of immigration studies at the libertarian-leaning Cato Institute, stated.
"It’s dragging the IRS into this administration’s immigration policies," commented Nina Olson, executive director for the Center for Taxpayer Rights.
Previous Attempts at Data Sharing
This is not the first instance of the Trump administration attempting to leverage the IRS to advance its immigration agenda.
Last year, the Treasury Department entered into an agreement to share confidential taxpayer information of individuals without legal status with Immigration and Customs Enforcement (ICE). The aim was to assist ICE in identifying individuals for deportation.
A federal judge subsequently blocked this data-sharing agreement, ruling that it violated federal taxpayer privacy laws. Nevertheless, before the injunction was issued, the IRS had already transmitted the addresses of 47,000 individuals to ICE.
