In the upcoming tax season, American taxpayers may, for the first time, be required to disclose their citizenship status or work authorization when filing their taxes.
According to the latest draft of the tax forms for the next tax season released by the Internal Revenue Service (IRS), the Form 1040 now includes a new question that asks taxpayers and their spouses to indicate whether they are U.S. citizens, U.S. nationals, or foreign individuals authorized to work in the U.S. This additional requirement comes as part of the enhanced scrutiny plan for individual income tax refunds announced by the U.S. Department of the Treasury and IRS in August.
In a move to strengthen the oversight of tax exemptions and credits, the IRS has introduced a new draft of Schedule 3-A, which now mandates taxpayers to substantiate their eligibility for various deductions, including earned income tax credits, additional child tax credits, American opportunity tax credits, and adoption tax credits, when filing their returns.
Richard Pon, a registered accountant in San Francisco, noted that the new question on the Form 1040 correlates closely with the information requested in Schedule 3-A, aligning the inquiries across both forms.
The Treasury Department and IRS have emphasized that under the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the eligibility for tax refunds is considered a federal benefit reserved for U.S. citizens, nationals, and qualified foreign individuals. Tax forms require individuals to confirm their legal status when seeking these benefits.
Applicants eligible for tax refunds encompass lawful permanent residents, asylees, refugees, and other groups designated under the PRWORA guidelines. Married couples filing jointly may claim these benefits if one spouse is a U.S. citizen, U.S. national, or qualifying foreign individual.
In instances where individuals are not eligible for these specific tax refunds, they can still claim other relevant tax credits, as per the Treasury Department.
Yenisley Diaz, owner of Chico Taxes LLC and a registered IRS tax agent in South Carolina, remarked to “USA Today” that the laws from 1996 have mandated the reporting requirements for federal benefits, with the actual enforcement beginning only now.
Despite potential public backlash, experts foresee that the final version of the Form 1040 will retain the newly added citizenship status question.
There is concern among some individuals that sharing such information could lead to data sharing with other federal entities or dampen the willingness of non-citizen taxpayers to voluntarily comply with tax regulations, thereby impacting overall tax compliance.
In February 2025, the IRS faced a lawsuit for granting access to taxpayer data to the Department of Government Efficiency (DOGE), which prompted a court ruling to cease disclosing taxpayer information related to government immigration enforcement actions. The recent decision by the federal appellate court upheld the ruling made by the lower court.
Moreover, some fear that the inclusion of the new question may result in immigrants with Temporary Protected Status (TPS) or recipients of the Deferred Action for Childhood Arrivals (DACA) program unlawfully availing themselves of these tax benefits.
The Treasury Department and IRS estimate that among the approximately 24 million taxpayers claiming these specific tax credits, around 200,000 to 700,000 individuals (0.8% to 2.8%) may be ineligible to enjoy these exemptions due to not meeting the requisite status requirements for the 2026 tax year.
Based on government calculations, the average tax refund per taxpayer for the 2026 tax season is projected to be $3,656, potentially leading to government savings amounting to approximately $700 million to $2.6 billion.
The nonpartisan Pew Research Center suggests that the actual number of affected individuals could surpass the estimates provided by the Treasury Department and IRS.
Tax experts stress the importance of accurate tax reporting and caution against providing false information on federal documents, which could constitute perjury. Falsifying tax information may impact naturalization applications under the “good moral character” standard stipulated in U.S. immigration law.
They highlight that unlike in the past three decades where many ineligible individuals received these tax refunds, such discrepancies are unlikely to be overlooked in the future. Furthermore, the new regulations underscore the tightening connection between tax compliance and immigration law.
Tax agencies emphasize that the Form 1040 is a federal document, and signing it entails legal responsibility. Answering the new question incorrectly could have severe repercussions on one’s current status, future visa renewals, and eventual naturalization applications.