IRS Weighs Requiring Dual Citizens to
Self-Identify on Form 1040
A proposed checkbox on next year’s standard tax return would, for the first time in the form’s history, distinguish U.S. citizens from those holding a second passport — raising legal, privacy, and compliance concerns for an estimated five million Americans.
| ~5 Million
Americans estimated to hold dual citizenship |
$66 Billion
Federal taxes paid by undocumented workers (FY 2023) |
$313 Billion
Projected 10-year revenue loss if compliance falls |
42,000+
Taxpayer records erroneously shared with DHS by IRS |
What Is Being Proposed
The Internal Revenue Service is weighing a significant change to its Form 1040 — the standard individual income tax return filed by over 150 million Americans annually. According to a Reuters exclusive citing three people familiar with the internal deliberations, IRS officials have drafted two competing versions of next year’s form.
Only one of those drafts contains a new element: a single checkbox reading, “Check this box if you are a non-U.S. citizen or have dual citizenship.”
If adopted, this would mark the first time in Form 1040’s history that U.S. citizenship status has been directly embedded in the core filing structure. The Treasury Department, which oversees the IRS, declined to comment. No formal rulemaking process or official timeline has been announced. Crucially, this type of administrative change does not require Congressional approval — the IRS holds independent authority over the design of its own forms.
| “They are no longer asking where you earn. They are asking where else you belong. When a tax authority starts taking attendance on your other allegiances, it has stopped treating citizenship as a relationship and started treating it as a leash.”
— Adam Juchniewicz, Founder & CEO, Bitcitizen |
The Dual Citizenship Dimension
Much of the media coverage surrounding the proposal has focused on its potential impact on undocumented immigrants, who are legally required to file and pay U.S. taxes and have historically used tax compliance to support immigration applications. However, a significant and underreported dimension involves Americans who have lawfully obtained second citizenships through investment programs, ancestry, or naturalization abroad.
An estimated five million Americans hold citizenship in at least one other country. For this population — and for globally mobile professionals and investors in the residency-by-investment industry — the checkbox would create a formal, penalty-of-perjury record on a federal return linking their tax identity to the fact of a second nationality. Marking the box incorrectly — whether by omission or error — could expose filers to serious legal consequences.
The United States already operates one of the most expansive citizenship-based tax regimes in the world, requiring Americans to report and pay taxes on worldwide income regardless of where they reside. This policy is shared only with Eritrea. Since 2010, the Foreign Account Tax Compliance Act (FATCA) has required foreign financial institutions to report accounts held by U.S. persons. A Form 1040 checkbox would add a self-declaration layer on top of a surveillance infrastructure that already monitors dual nationals through institutional channels.
ITIN Differentiation: A Parallel Track
Separately from the Form 1040 proposal, the IRS is also exploring whether to restructure Individual Taxpayer Identification Numbers (ITINs) to flag a filer’s immigration status. ITINs are nine-digit numbers issued to non-citizens who are ineligible for Social Security Numbers, enabling them to meet federal tax obligations.
Under the proposed restructuring, the IRS would differentiate between undocumented immigrants and other ITIN-eligible groups, potentially requiring explicit disclosure of immigration status when applying for or renewing these numbers. This parallel measure could significantly complicate access to the tax system for millions of legal and long-term resident filers.
Timeline of Related Government Actions
| April 2025 | IRS and the Department of Homeland Security (DHS) enter a memorandum of understanding to share confidential taxpayer data with Immigration and Customs Enforcement (ICE) for use in deportation operations. ICE seeks data on up to 7 million taxpayers. |
| July 2025 | IRS shares approximately 47,000 taxpayer addresses with DHS, far exceeding the initially disclosed scope. |
| November 2025 | A federal judge blocks further IRS-DHS data sharing following a lawsuit filed by the Center for Taxpayer Rights. The Trump administration appeals the ruling. |
| December 2025 | Senator Bernie Moreno introduces the Exclusive Citizenship Act, which would ban dual citizenship outright and require Americans holding foreign nationality to choose one passport within one year. GovTrack estimated a 3% chance of enactment. |
| February 2026 | IRS concedes in court it erroneously shared data on more than 42,000 taxpayers with DHS. A second federal court in Massachusetts prohibits DHS from using data obtained through the sharing agreement. Two simultaneous court orders block further IRS-ICE data transfers. |
| April 2026 | The White House begins drafting an executive order requiring U.S. banks to collect proof of citizenship from account holders — departing from existing Know Your Customer (KYC) standards. Treasury Secretary Scott Bessent confirms the draft is “in process.” |
| May 2026 | Reuters reports the IRS citizenship checkbox proposal for Form 1040. Treasury declines to comment. No final decision or formal rulemaking announced. |
Revenue and Compliance Risks
The fiscal consequences of reduced immigrant tax compliance are substantial. The Yale Budget Lab estimated in April 2025 that fear-driven non-filing among immigrant communities could cost the federal government $313 billion in lost revenue over the following decade, with projections ranging from $147 billion to $479 billion depending on behavioral changes by taxpayers and employers.
Undocumented workers contributed approximately $66 billion in federal taxes in fiscal year 2023, roughly two-thirds of which came through payroll withholding. Disclosing taxpayer personal information outside of narrow legal exceptions carries serious penalties under federal law, including potential imprisonment. The IRS’s own erroneous data sharing in 2025–2026 has already exposed the agency to significant legal liability.
What Happens Next
No final decision has been announced. The IRS retains administrative authority over form design and can implement a citizenship checkbox without Congressional legislation. Americans who have acquired second citizenships — through investment migration programs, citizenship by descent, or naturalization in another country — would face this checkbox alongside every other filer.
With multiple concurrent federal court orders blocking IRS-DHS data sharing, and litigation potentially heading toward the Supreme Court, the legal environment surrounding IRS citizenship data remains highly contested. Tax professionals, dual nationals, and globally mobile individuals should monitor developments closely as the 2027 filing year approaches.
