Now Reading: US proposes new rule to bar H-1B workers from tax credits
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US proposes new rule to bar H-1B workers from tax credits
The Trump administration has proposed regulations that could bar many H-1B visa holders from claiming refundable portions of four major federal tax credits, including the Child Tax Credit and Earned Income Tax…
The Trump administration has proposed regulations that could bar many H-1B visa holders from claiming refundable portions of four major federal tax credits, including the Child Tax Credit and Earned Income Tax Credit. The US Treasury Department and IRS announced the proposal to enforce the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which limits federal public benefits to US citizens, nationals and 'qualified aliens' such as permanent residents and refugees.
Treasury Secretary Scott Bessent said the move aims to enforce existing law on access to public benefits. If finalised, the refundable portion of the Adoption Tax Credit, Child Tax Credit, American Opportunity Tax Credit and Earned Income Tax Credit would be unavailable to most temporary visa holders, including H-1B workers, unless they are married to a qualified alien.
The proposed regulations have not yet taken effect. They would apply to tax years ending on or after the date of final publication. The Treasury Department will accept public comments before issuing a final rule.
Indian Opinion Analysis
The proposed rule revives a 1996 welfare law that Congress has never fully applied to tax credits, leaving a legal ambiguity that has existed for nearly three decades. If finalised, it would primarily affect Indian professionals on H-1B visas who pay US taxes but claim the Child Tax Credit or Earned Income Tax Credit for their dependents. With over 300,000 H-1B workers from India, the financial hit could run into hundreds of crores annually per family. The Treasury will now open a public comment period before issuing a final rule, a process that typically takes six to 12 months. The outcome will depend on how the IRS defines 'qualified alien' and whether Congress steps in to clarify the law.
Source: greatandhra.com
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