Last year, President Trump signed the One Big Beautiful Bill, drastically cutting social safety net programs. Some of those impacts are being felt during tax season.
Among other things, the bill limits the federal tax credits that ITIN-holders are eligible for. An ITIN is a nine-digit number that serves as an alternative to a Social Security Number (SSN), which gives folks without legal status the ability to pay taxes.
To make sense of this year’s changes and how they’ll impact immigrants, WUWM’s Jimmy Gutierrez spoke with Cristina Villanueva, owner of Ambas Financial Services in Milwaukee.
This interview has been edited for length and clarity.
Jimmy Gutierrez: This is the first tax season since the passage of President Trump's Big Beautiful Bill. What changes should ITIN-holders and folks without SSNs know about, as they work their way through this tax season?
Cristina Villanueva: Usually, an ITIN-holder claims their children as dependents. They say, “We’re married. I have an ITIN, my husband has an ITIN, and we have three children that are here in the United States who were born here. They're legal, and we usually qualify for the child tax credit.” Now, they’re no longer eligible for the child tax credit, even though the kids are US citizens. Those dependents do not qualify for the child tax credit, because both of the parents are ITIN-holders. So that makes a big difference.
However, if the parents are ITIN-holders and they have kids who have a social, they're still eligible for the other dependent credit, which is $500. So, it's still important for you to do your tax return, whether or not you get the credits, and make sure that you know which credits you are eligible for based on the changes that have happened. If one person has a Social Security Number and the other person has an ITIN, they will qualify for the child tax credit.
So then the partner would be the person applying for the child tax credit. With ITINs, there's long been this promise from the IRS that sensitive information won't be shared and won't be weaponized against you. What are you seeing from clients this year when it comes to filing taxes and sharing that information?
The ITIN option was started in July of 1996. Since then, until now, there was always this relationship where ITIN-holders could say, “Hey, I don't have a valid SSN. I am in the process of possibly getting one, but I'm still going to declare my tax return.” You were able to do that whether or not you had an SSN, and the IRS stated that it would not share information that has to do anything with your immigration status. But now, it’s harder for people to trust that their information is safe with the IRS. To have an administration come in and say, “We're going to possibly use that information against you,” that's where there's fear. And there's a lot of misinformation out there as well. The only reason that immigration will be requesting information from the IRS is if someone has a criminal background, etc. They require the IRS to give them information about where that individual is. But they're not going after people just because they're declaring a tax return. It’s very important that we say that.
Another thing is that the information is already out there. So, if you're not going to do your tax return, it's going to be worse because the IRS knows, “Christina always does this W-2. She didn't do her W-2 this year. We don't know if she's declaring children or not, so we're gonna put her down as ‘single with no dependents.’ Now I'm gonna have a tax liability, along with fees for late filing or noncompliance. And then I’ll get a big tax bill when I could have avoided this if I would’ve done my tax return.” So, there's a lot of misinformation out there where people are like, “Don't do your taxes because they're not going to give you any money and because they're going to come after you,” and stuff like that. And I’d say no. At the end of the day, you're not doing your taxes so that you get a return. You're doing your taxes because that’s the right thing to do as you’re earning income here in the United States. I always say, talk to your accountant, talk to a tax professional, because there are strategies that you can use so that you don't owe money at the end of the year.
Speaking of misinformation, something that often gets lost in these conversations is the economic impact that ITIN-holders and immigrants have. From a tax revenue and social services point of view, what do we know about the economics of ITIN holders?
So, one of the biggest things is that ITIN-holders are clearly working. They're still contributing to Social Security and Medicare. So, let's just make sure we note that. If we look back to 2022, for example, ITIN-holders filed 3.8 million tax returns and contributed $6.5 billion to Social Security and Medicare. I’m just going to let that sink in. Now, to remind you, ITIN-holders are not able to get health insurance for free. They’re not able to apply for unemployment. They’re not able to apply for Social Security. So, this is money that’s clearly helping the economy, because we have a lot of people who depend on Social Security and Medicare. So the IRIS knew exactly what they were when they started the ITIN policy. Why? Because it's a contribution. The impact that immigrants have is huge.
I mean, recently I was in a grocery store minding my own business, and I overhead this lady talking to the gentleman who's working there and saying, you know, “These immigrants should not be getting things for free,” and blah, blah, blah. It’s not about getting political here – whether I'm a Republican or Democrat or whatever. It's about the rights of the people, because both parties have not done right by the immigrant community. And I say that out loud because it is time that we as immigrants take ownership and take responsibility of this. And the best way to take ownership and responsibility is to continue to create wealth within our communities. And I'll say that again. Creating wealth in our communities is going to give us the power to be able to make certain decisions, to be able to create jobs, to be able to create businesses, to be able to have better housing and better schools. It's all a ripple effect.
When you're talking about creating wealth, I'm thinking of the massive population growth of immigrants and Latinos within the nation, within Milwaukee and within our home state of Wisconsin. What's something that you're keeping your eye on in the future – something that would help Latinos and ITIN-holders going forward?
I mean, we all can dream, right? I'm a big believer that there needs to be a change. And I hope that in my lifetime I'm able to see it. I feel I'm very young still, but I hope that I'm able to see in a couple of years some new laws that give the opportunity to the people that have been here for so many years. And we have our DACA recipients who worry with every new presidential election: will they remove my DACA or not? They continue to be that target.
So, what I'm hoping is that there is a program in place where they give them not just work authorization, but also allow them to become residents of the U.S. for all the years that they’ve been contributing to this country. That is my hope: that in the future we stop dealing with immigrants always being this target – understanding that the people who’ve been here for so long can have the ability to get their residency and become future citizens of this country.
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