Quote Originally Posted by dragonrider
The don't get the Earned Income Tax Credit.
They aren't supposed to, but it seems they are:
Illegals get undeserved tax benefits. The 1999 report appears to include extensive commentary on the ITIN applications of 340,000 illegal aliens, but most of it was redacted. The IRSā??s objective may be to collect tax revenue from the broadest base possible ā?? a laudable goal. Ironically, however, this has resulted in the IRS ignoring illegalsā?? presence in the United States. One of the reasons why illegals are issued ITINs is that IRS regulations determine resident alien status based on "substantial presence" in the United States, not legal residence. Thus, illegal aliens who file tax returns are treated in the same way as legal foreign residents and receive the same tax benefits, such as spousal exemptions, child and education tax credits. The one exception seems to be the Earned Income Tax Credit, which is available to legal permanent residents but which the IRS decided would not be available to illegal aliens.

Intended or not, it is clear that a significant number of illegal aliens are receiving the Earned Income Tax Credit. This is talked about quite openly by their advocates. Moreover, in its publications the IRS is signaling that this is a problem. One of three bullet points at the top of Form W-7 used to apply for an ITIN reads: "Receipt of an ITIN does not make you eligible to claim the earned income credit (EIC)."5

Further, a section describing the Earned Income Tax Credit on the IRS web site lists six rules that must be followed. "Rule 1. You Must Have a Valid Social Security Number (SSN). . .You cannot get the EIC if, instead of an SSN, you (or your spouse if filing a joint return) have an individual taxpayer identification number (ITIN). ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN."6

It is an unfortunate fact of life that U.S. citizens routinely claim tax deductions and credits to which they are not entitled. It is a cat and mouse game that presumably the IRS wins more often than not. However, there was language in the Inspector Generalā??s 1999 report implying that both "revenue protection issues" and "operational problems during the implementation" period resulted in the ITIN being vulnerable to fraud. It is possible that the IRS system was programmed in a way that makes it very difficult to prevent payment of the Earned Income Credit if a resident alien unauthorized to work in the United States claims it.
Center for Immigration Studies