Child Tax Credits For Illegal Immigrants

The Treasury Department reports that illegal immigrants filing tax returns using the Individual Tax Identification Number are receiving more than $1.5 billion each year from the federal government through the Child Tax Credit and the Additional Child Tax Credit.

Many illegal immigrants are regularly accessing welfare benefits in the United States in different ways. They may do so through those state and local governments that do not verify citizenship or that accept false proof of citizenship. In many cases, they access welfare benefits through their citizen children born in the United States.

Additionally, and this is the focus of this report, there are ways illegal immigrants can obtain a form of federal welfare that is available to income tax filers. Since a significant percentage of illegal immigrants have low incomes, work “off the books,” or work with false names and Social Security numbers, it is likely that many report little or no income when applying for federal, state, or local benefits.

An illegal immigrant cannot qualify for a legitimate Social Security number to use to file income tax returns or for any other purposes. Thus, a major facilitator for illegal immigrant access to income tax-based welfare benefits is the nine-digit Individual Tax Identification Number (ITIN) established by the IRS in 1996. It was initially established for people like foreign investors, who are required to file U.S. income tax forms but can not legally obtain a Social Security number.

However, the IRS has allowed illegal immigrants to apply for and use the ITIN for filing income taxes returns related to income earned in the United States. Consequently, the ITIN quickly became a vehicle for illegal immigrants to obtain refunds of part or all of income taxes withheld (if any) from their pay and for obtaining refundable tax credits above and beyond any withholding.

All but a small minority of people using ITINs today are illegal immigrants.

Since Congress did not explicitly limit the Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC) to holders of Social Security numbers, the IRS has allowed ITIN filers to obtain billions of dollars of refund checks related to these tax credits. If the CTC results in negative total tax due, it may be converted into an ACTC, which is the vehicle that the ITIN filer (or Social Security number filer) may use to collect the negative tax in the form of a check from the IRS. By IRS rules, the ACTC is a refundable credit available to individuals with no tax liability.      Read more here>>