Require People Who Claim the Earned Income Tax Credit and Child Tax Credit to Have a Social Security Number That Is Valid for Employment

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2023–
Decrease (-) in the Deficit -0.1 -2.8 -2.7 -2.7 -2.6 -2.8 -2.8 -2.7 -2.7 -2.6 -10.9 -24.5

Data source: Staff of the Joint Committee on Taxation.

This option would take effect in January 2023.

The earned income tax credit (EITC) and the child tax credit both provide assistance to certain taxpayers with low or moderate income, but the eligibility rules differ. Most EITC claimants and their qualifying children must have a Social Security number that is issued by the Social Security Administration solely to people authorized to work in the United States. (However, there are exceptions for some Social Security numbers issued before 2003.) By contrast, eligibility for the child tax credit currently requires only the qualifying child to have a Social Security number that is valid for employment purposes. After 2025, noncitizens will be able to claim the credit if they and their qualifying child have a Social Security number (with no restriction on the reason for issuance) or individual taxpayer identification number, which are issued by the Internal Revenue Service (IRS) to anyone who is required to file a tax return but cannot obtain a Social Security number.

Under this option, people who are not authorized to work in the United States would not be eligible for either the EITC or the child tax credit. For both credits, taxpayers, spouses, and qualifying children would be required to have a Social Security number issued to U.S. citizens and noncitizens authorized to work in the United States. The IRS would be authorized to deny the credits using "mathematical and clerical error" (math error) procedures when taxpayers and their children did not have Social Security numbers that were valid for employment purposes. Using math error procedures prevents the credits from being paid to those taxpayers and does not require the IRS to take further action, although the taxpayers retain the right to dispute the IRS's determination.