The Internal Revenue Service is considering a significant change to the federal tax filing process that would ask taxpayers to disclose whether they are U.S. citizens, U.S. nationals, or lawfully authorized to work in the country.
A draft of the Form 1040 released by the IRS includes a question asking filers: “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.?” The IRS cautions that draft forms are not final and should not be used for filing.
The proposed question comes alongside separate Treasury and IRS regulations targeting the refundable portions of four federal tax credits: the Earned Income Tax Credit, Child Tax Credit, Adoption Tax Credit and American Opportunity Tax Credit.
Under the proposed regulations, the refunded portion of those credits would be treated as a “Federal public benefit” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Taxpayers seeking that refundable portion would generally have to be U.S. citizens, U.S. nationals or “qualified aliens” as defined under the 1996 law.
The proposal is narrower than a simple distinction between documented and undocumented immigrants. Treasury's definition of “qualified alien” under the 1996 law does not encompass every person who is lawfully present or authorized to work in the United States. Treasury and the IRS say the change is intended to apply existing federal eligibility requirements and prevent benefits from being paid to people who are barred from receiving them.
For affected taxpayers, the distinction between a tax credit and its refundable portion would be important. A taxpayer could potentially remain eligible to use an otherwise available credit to reduce a tax liability while being restricted from receiving the portion that exceeds the amount of tax owed.
For example, if a taxpayer qualified for a $1,000 refundable credit but owed $200 in federal income taxes, the refundable portion would be the remaining $800.
The proposed citizenship question on Form 1040 is separate from the “qualified alien” standard contained in the Treasury proposal. The IRS has also released a separate Schedule 3-A, titled “Federal Public Benefit,” as part of its draft tax forms for 2026.
The changes have nevertheless raised questions among tax and immigration experts about why the IRS would need additional immigration-related information from taxpayers. Critics of the proposal have argued that existing tax-credit requirements already contain identity and Social Security number rules that can limit eligibility for certain credits.
The issue also touches on broader concerns over the handling of taxpayer information. Federal law places restrictions on the disclosure of tax-return information, while disputes over the sharing of taxpayer data with immigration authorities have generated litigation and congressional scrutiny.
The administration has presented the proposed changes as part of a broader effort to enforce eligibility requirements for taxpayer-funded benefits. Treasury Secretary Scott Bessent said the rules are intended to ensure that tax benefits go to people legally entitled to receive them.
The proposed regulations are not yet final. Treasury and the IRS are accepting public comments and have scheduled a public hearing for October 14, 2026. The rules would generally take effect for tax years ending on or after the date the regulations are ultimately published as final regulations.
For now, the Form 1040 citizenship and work-authorization question remains part of a draft. Whether it ultimately appears on the tax return—and exactly how the administration's proposed restrictions on refundable credits are implemented—will depend on the final forms and regulations.
The changes would mark a notable intersection of tax administration and immigration policy, placing new emphasis on verifying who is legally eligible to receive refundable federal tax benefits.
