Ask the Advisor: Child Tax Credits

Ask the Advisor: Child Tax Credits

Is The IRS Paying Illegals Billions In Child Tax Credits?

Q: I recently received an email with a link to a “Tax Loophole for Illegals” video claiming that the IRS had paid over $4 billion in Child Tax refunds to illegal immigrants. Is this an Internet rumor? How can our government give away billions to illegals, when they don’t pay any taxes?

A: This is no rumor — it’s a fact. In 2010 the IRS paid illegal immigrants $4.2 billion in the child tax refunds. The original version of the video you saw, from WTHR TV in Indiana, appears to be based on a report issued over a year ago by the U.S. Treasury Inspector General for Tax Administration. The report says that the number of tax returns filed by illegal immigrants, as well as the amount claimed in Additional Child Tax Credits, has been growing rapidly and warns “the risk of fraud for these types of claims is significant.” The video featured a whistleblower tax consultant who says that in many of the returns he has seen, undocumented workers are claiming the tax credit for kids who live in Mexico.

“We’ve seen sometimes 10 to 12 dependents, most times nieces and nephews, on these tax forms,” the whistleblower told WTHR Eyewitness News. The Treasury Inspector General report corroborates this, saying that questionable claims are made that include children living outside the United States. The individuals who received the tax credits filed an income tax return. Even though it’s illegal for unauthorized immigrants to work in this country, the federal government requires payment of taxes on earnings. Even income obtained illegally is subject to income taxes. Because illegals don’t qualify for a Social Security Number, the IRS provides an Individual Taxpayer Identification Number (ITIN) to enable them to file a return.

The Additional Child Tax Credit currently amounts to $1,000 per child and a filer can receive a refund even if no income tax was withheld or paid. According to the Treasury Inspector General, the average amount per return in 2010 was $1,800, but 9,000 taxpayers claimed a total of $10,000 or more by filing for previous year tax periods. The following table illustrates the huge growth in payments to illegals.


Year Number of ITIN Filers for Additional Child Tax Credit Amount Paid By IRS
2005 796,000 $924 million
2008 1.5 million $2.1 billion
2010 2.3 million $4.2 billion

The inspector general has recommended that the IRS should require ITIN filers claiming the Additional Child Tax Credits to provide documentation that their dependents meet the qualifications for the credit, including residency. The IRS disputes this, saying that it doesn’t have the legal authority to verify and disallow the child tax credits.

The House recently approved legislation that would require a valid Social Security Number in order for tax filers to claim the child tax credits, but the fate of the legislation is uncertain in the Senate. TSCL is strongly opposed to allowing illegal immigrants to collect refundable tax credits of ANY kind. We encourage you to contact your Members of Congress to tell them to put a stop to this $4.2 billion hand-out. Send an email to your Member of Congress online.

On the web: Here’s the link to the WTHR TV “Tax Loophole” video or visit

Sources: Individuals Who Are Not Authorized To Work In The United States Were Paid $4.2 Billion In Refundable Credits, Treasury Inspector General For Tax Administration, July 7, 2011, . “Tax Loophole Costs Billions,” transcript, Bob Segall, WTHR, 13 Indiana, May 10, 2012.