SPANISH VERSION

NOT A U.S. CITIZEN? THE IRS WANTS TO CHANGE WHO CAN RECEIVE PART OF CERTAIN TAX REFUNDS

A new Treasury/IRS proposal could affect the refundable portion of four major tax credits — but Green Card holders are specifically included among the qualified groups.

By Juan V. Fanti, MBA, CAA, PA

On August 19, 2026, the U.S. Department of the Treasury and IRS proposed regulations applying PRWORA eligibility requirements to the refundable portions of four individual tax credits:

Earned Income Tax Credit (EITC)
Child Tax Credit (CTC)
American Opportunity Tax Credit (AOTC)
Adoption Tax Credit

The proposal would generally require the taxpayer receiving the refundable portion to be a U.S. citizen, U.S. national or “qualified alien” when the original return claiming the affected credit is filed.

Green Card holders are NOT automatically excluded

This is one of the most important points.

Treasury specifically identifies Lawful Permanent Residents, along with asylees, refugees and certain other PRWORA groups, as qualified aliens.

Therefore:

A taxpayer does NOT have to be a U.S. citizen simply because these proposed regulations are finalized.

A Green Card holder may satisfy this particular proposed immigration-status requirement.

For joint returns, the proposal states that only one spouse must be a U.S. citizen, U.S. national or qualified alien for this PRWORA requirement. Other existing eligibility requirements for each credit would continue to apply.

Only the refundable portion is targeted

The proposal does not simply eliminate the credits.

Treasury states that the refunded portion exceeding the taxpayer's income tax liability would be treated as the federal public benefit.

A taxpayer who does not qualify for that refundable portion could potentially still use an otherwise allowable portion of an affected credit to offset federal income tax liability.

And importantly:

These are PROPOSED regulations, not final regulations.

Treasury says they would apply to tax years ending on or after the date the regulations are published as final.

Disability, Social Media Income, Marriage and an Immigrant Spouse

Consider a taxpayer receiving Social Security disability-related benefits who also receives benefits connected to her children, earns money through social media, remarries an immigrant and becomes pregnant.

A professional tax preparer should not treat those facts as one issue.

They create several separate analyses.

If she receives SSDI, the benefits may become partially taxable depending on her overall income. Marriage itself generally does not terminate Social Security disability benefits based on her own work record.

If she receives SSI, the analysis changes substantially. SSI itself is not federally taxable, but income, resources, living arrangements and potentially a spouse's income can affect SSI eligibility or payment amounts.

If she earns money through YouTube, Instagram, TikTok, Facebook or another platform, that income generally must be evaluated and reported for tax purposes even when no information return is received. It may constitute self-employment income.

That activity can also matter separately to Social Security. For 2026, SSA lists the general SGA amount as $1,690 per month for non-blind individuals and $2,830 for blind individuals, while applying different evaluation rules to self-employment.

Pregnancy does not by itself establish that a person is no longer disabled. Tax preparers should report the financial facts correctly rather than making medical disability determinations.

Benefits belonging to a child should also not automatically be included as the parent's Social Security income. IRS guidance generally evaluates the taxability of the child's Social Security benefits based on the child's own income and benefits.

Finally, marrying an immigrant does not automatically give that spouse U.S. citizenship. Marriage may create a pathway through immigration procedures; citizenship is a separate process. USCIS notes that qualifying spouses of U.S. citizens may potentially naturalize after three years as lawful permanent residents under the special spousal rules, provided all requirements are met.

For tax purposes, a U.S. citizen or resident married to a nonresident alien may under certain circumstances elect to treat the nonresident spouse as a U.S. resident and file jointly. That decision can require worldwide income of both spouses to be reported, making it a tax decision that should never be made simply because software shows a larger refund.

The bigger lesson

The August 19 proposal illustrates something increasingly important:

IMMIGRATION STATUS + TAX STATUS + FAMILY STATUS + REFUNDABLE CREDITS must be analyzed together.

A Green Card, SSN, ITIN, marriage, foreign spouse, child, disability benefit or online business can each change part of the analysis.

At 200GFS, our objective is not to produce the largest refund a computer can calculate.

It is to determine the correct tax result supported by the taxpayer's facts, documents and applicable law.

Juan V. Fanti, MBA, CAA, PA
Two Hundred Global Financial Solutions, LLC — 200GFS
📲 +1 (954) 683-3578
🌐 200GFS.com

For general educational purposes only. The Treasury/IRS regulations discussed above are proposed and are not currently final regulations.