The Internal Revenue Service is reviewing a draft of next year’s Form 1040 that would require every individual filer to check a box indicating whether they are a non‑U.S. citizen or hold dual citizenship. The change is still in the proposal stage, with no formal rulemaking or implementation timeline announced.
Proposal details
- Two competing drafts of the 2026 Form 1040 have been circulated internally.
- The second draft adds a single line: “Check this box if you are a non‑U.S. citizen or have dual citizenship.”
- The form has never previously distinguished between citizens and non‑citizens in its core filing sections.
- The IRS is also examining whether Individual Taxpayer Identification Numbers (ITINs) could be coded to flag a filer’s immigration status.
Impact on dual citizens
- An estimated five million Americans hold citizenship in at least one other country.
- A self‑identification checkbox would create a penalty‑of‑perjury record linking a taxpayer’s return to the fact of a second nationality.
- The United States already enforces citizenship‑based taxation, requiring U.S. persons to report worldwide income regardless of residence—a regime shared only by Eritrea.
- Since 2010, the Foreign Account Tax Compliance Act (FATCA) has compelled foreign financial institutions to report accounts held by U.S. persons; the proposed checkbox would add a direct self‑reporting element.
Related federal initiatives
- April 2025: The White House drafted an executive order that would require U.S. banks to collect proof of citizenship from account holders, expanding beyond standard “Know Your Customer” verification.
- December 2025: Senator Bernie Moreno introduced the Exclusive Citizenship Act, which would ban dual citizenship and force Americans with a foreign passport to choose one within a year; GovTrack rates its enactment chance at 3 %.
- Both measures reflect a broader trend of embedding citizenship verification into financial and administrative systems.
Data‑sharing backdrop
- Throughout 2025, Treasury and the Department of Homeland Security (DHS) attempted to share confidential taxpayer data with Immigration and Customs Enforcement (ICE) for deportation purposes. A federal judge blocked the disclosures in November after a lawsuit by the Center for Taxpayer Rights; the government appealed.
- By February 2026, the IRS acknowledged that it had erroneously shared data on more than 42,000 taxpayers with DHS, a violation that can carry criminal penalties.
- The Yale Budget Lab estimated in April 2025 that reduced tax compliance among immigrant communities—driven by fear of enforcement—could cost the federal government $313 billion in lost revenue over the next decade (range $147 billion–$479 billion). Undocumented workers paid roughly $66 billion in federal taxes in FY 2023, about two‑thirds through payroll levies.
What comes next
- No final decision has been made on the citizenship checkbox; the IRS can modify form design without congressional approval.
- If adopted, dual‑citizen filers would face the same requirement as all other taxpayers, with false statements subject to perjury penalties.
The proposal underscores an expanding federal focus on linking tax compliance with citizenship status, raising privacy and enforcement concerns for the growing population of American dual nationals.
Source article: www.imidaily.com
