Proposed IRS Rule That Reduces Immigrants' Tax Credits Could Advance
Summary
The Biden administration is reviewing a proposed rule that might limit some immigrants’ access to federal tax credits. The rule would apply a 1996 law to reduce refundable tax benefits like the Earned Income Tax Credit for certain immigrants.Key Facts
- The Treasury Department sent the proposal to a regulatory office on July 14 for review before public comment.
- The proposal aims to apply the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 to some refundable tax credits.
- Affected tax credits may include the Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Tax Credit, and Saver’s Match Credit.
- The rule could exclude immigrants who are not “qualified aliens” under federal law from receiving these tax credits.
- Lawful permanent residents and some immigrants with legal status may still be eligible if they meet IRS rules.
- Immigrants without Social Security numbers valid for work generally cannot claim certain credits like the Earned Income Tax Credit.
- Undocumented immigrants pay billions in federal, state, and local taxes annually but may lose access to some tax benefits if the rule advances.
- The final impact depends on the exact wording and which immigrant groups are included in the rule.
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