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A New Tax Form Question Could Affect Some Families’ Refunds in 2027

Most filers just check a box, but some families could lose part of a refund.

By Josh Koebert , Edited by Becca Borawski Jenkins

Updated Oct. 20, 2026

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The IRS released an early draft of the 2026 Form 1040 in September. For the first time, the individual income tax return asks filers about their citizenship or immigration status.

The yes-or-no question asks whether you're a U.S. citizen, U.S. national, or noncitizen lawfully authorized to work in the U.S. It sits on the first page, directly beneath the digital asset question, in a section renamed from "Digital Assets" to "Other Information."

Each spouse on a joint return answers separately, based on their status when the return is filed rather than during the 2026 tax year.

Checking how the change affects your household ahead of the filing season is one way to prepare yourself financially.

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Why the IRS is adding a citizenship question to Form 1040

Final instructions for the question aren't out, but the draft appears alongside a Treasury proposal on refundable tax credits.

That proposal, released Aug. 19, would classify the refunded portion of four tax credits as "federal public benefits" under a 1996 welfare law. They are the earned income credit, the additional child tax credit, the refundable American opportunity credit, and the refundable adoption credit.

That law generally limits such benefits to U.S. citizens, U.S. nationals, and qualified aliens, according to the IRS. The restriction applies only to money repaid in excess of your income tax bill, so a filer who doesn't qualify could still use the credits to reduce tax owed to zero.

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How the new Schedule 3-A question differs from page one

A draft Schedule 3-A, titled "Federal Public Benefit," asks whether you or your spouse is a U.S. citizen, U.S. national, or "qualified alien." A no answer takes the refunded portion of the four credits off your refund.

That's a narrower test than page one, which includes noncitizens lawfully authorized to work. Qualified aliens include lawful permanent residents, refugees, and asylees, the IRS says, but not H-1B workers or DACA recipients, notes CPA Nadia Rodriguez.

Couples face different rules, too. Page one asks for each spouse, but on Schedule 3-A, only one qualifying spouse is required for a joint return.

Tax preparers are flagging the mismatch. A DACA recipient might truthfully answer yes on page one and still fail the qualified-alien test, Rodriguez notes, and it's unclear what documentation preparers would be expected to review.

What the citizenship question means for most tax filers

For most taxpayers, the visible change would be another box on page one. Citizens answer yes, including each spouse on a joint return, and nothing in the draft indicates that answer changes the tax owed.

People claiming one of the four credits must also attach Schedule 3-A. Someone who meets the eligibility requirement retains the credit calculated under the normal tax rules.

Treasury estimates about 49 million 2026 returns will claim at least one of the four credits, and about 24 million will include a refunded portion. It expects tax software, used on more than 96% of returns, to calculate that amount automatically.

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How mixed-status households could lose part of a refund

On a joint return, only one spouse needs to be a citizen, U.S. national, or qualified alien. A citizen married to someone who is filing with an individual taxpayer identification number (ITIN) could still receive the full additional child tax credit, even if their answers on page one differ.

The greater impact is on returns for which no filer qualifies, such as those of a DACA recipient with U.S.-citizen children. That parent could use the credit against income tax owed but would lose the portion that would otherwise be refunded.

Treasury estimates that 200,000 to 700,000 taxpayers would lose that refunded portion for 2026 if the rule takes effect, with $700 million to $2.6 billion in credits disallowed.

Households composed entirely of ITIN filers who lack work-eligible Social Security numbers are already ineligible for the earned income credit and the child tax credit. For them, the main change is the new question.

Is the question a privacy risk or just eligibility enforcement?

On Sept. 8, a federal appeals court upheld an order blocking an IRS process that had provided 47,289 taxpayer records to Immigration and Customs Enforcement.

Nathan Goldman, a tax professor at NC State, writes that federal tax privacy protections should apply to the citizenship response, though the ruling suggests they're weaker than once thought. Rodriguez, whose practice works with many ITIN filers, worries that some taxpayers may become "afraid to file."

Treasury describes the rule as an effort to enforce restrictions Congress enacted in 1996. "The federal law is clear, and Treasury is enforcing it," Treasury Secretary Scott Bessent said.

Goldman also notes that if a benefit is limited by immigration status, the government needs some way to determine who qualifies. Treasury's proposal says tax-return information would remain generally confidential and that Schedule 3-A certifications would be used for tax compliance.

When the new question would first show up on your return

The current 2025 Form 1040 doesn't include this question. It applies to tax year 2026, so taxpayers would first encounter it when filing 2026 returns in spring 2027.

Both drafts still require Office of Management and Budget approval. The credit restrictions also depend on Treasury finalizing its rule, which Rodriguez explained would need to happen by Dec. 31, 2026, to apply to 2026 returns.

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Bottom line

For U.S. citizens, the change would mostly mean answering one more question. The new box itself doesn't alter the refund calculation. The financial stakes are higher for households claiming refundable credits when no filer meets the citizen, national, or qualified-alien requirement.

If your status could change before you file, timing matters. Your status would be checked on the day you file the return that first claims the credit, and an amended return filed after a status change won't recover the refunded portion. Talk through timing with a tax pro, and check IRS.gov/LatestForms for the final forms so you keep more of your money during tax season.

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