SECURE Benefits Act Ties Tax Credits to Valid Work Status, Imposing $5,000 Penalty on Invalid Claims

The SECURE Benefits Act of 2025 is setting up a major overhaul of how low- and middle-income tax credits are claimed, specifically by tying them directly to a taxpayer’s valid work authorization status. Starting January 1, 2027, the bill mandates that individuals with temporary work authorization must have that authorization verified as valid on the day they file their tax return to claim the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), the Savers Credit, and the new Saver’s Match. It also introduces a severe financial penalty—the greater of the full credit amount claimed or a flat $5,000—for fraudulent claims based on expired or invalid work status for the CTC, EITC, and Savers Credit.

The New Paperwork Trail for Temporary Workers

Section 2 of the bill formalizes a new system for individuals granted temporary work permission by Homeland Security (DHS). The Social Security Administration (SSA) will now issue a special, temporary, work-authorized Social Security Number (SSN) and card, clearly marked for specific job and time limits. This requires DHS to share expiration, renewal, and restriction details directly with the SSA, which then shares it with the IRS. For the person holding the card, this means the government is tracking their work status across three major agencies in real-time. This aims to clean up administrative confusion but puts the onus on the individual to ensure all three agencies have the exact same up-to-the-minute status.

Tax Credits: Valid Status Required on Filing Day

If you rely on the CTC or EITC, this is where the bill gets tight. Sections 3 and 4 state that if you have a temporary, work-authorized SSN, the IRS must confirm with DHS that your authorization is still valid on the day you file your tax return for that year. Imagine you had a valid work permit for 11 months of 2027, but your renewal application is pending and your permit expires on December 31st. If you file your taxes on January 15, 2028, and your status hasn't been renewed yet, you might be ineligible for the credit, even though you earned the income and had the authorization for the entire tax year. This creates a tight window and high administrative risk for those navigating the immigration system, potentially delaying tax filings or denying benefits.

The $5,000 Penalty and Joint Filing Changes

Section 3 also introduces a major penalty for fraudulent CTC claims related to invalid work authorization. If the IRS determines a claim was fraudulent because the underlying work status was expired or invalid, the taxpayer is penalized $5,000 or the full credit amount, whichever is larger. While the penalty can be waived for “reasonable cause” and “good faith,” this puts a massive financial risk on low-income filers if an administrative error or delay in work permit renewal occurs. Furthermore, joint filers claiming the CTC must now provide an SSN for both spouses, eliminating previous flexibility and further tightening identification requirements.

Savers Credit and Math Error Authority

Sections 5, 6, and 7 extend these strict SSN requirements and penalties to the Savers Credit, the Saver’s Match (a retirement savings benefit), and education tax credits (American Opportunity and Lifetime Learning Credits). If you want to claim these benefits, you must include your SSN on the return, and penalties apply if you mess up the claim. Finally, Section 8 changes the IRS’s “math error authority” for all these credits (EITC, CTC, Savers Credit). The IRS will now focus strictly on the omission of a correct Social Security Number rather than a general Taxpayer Identification Number (TIN) when flagging returns for simple math errors. This standardizes the ID requirement but also means if your SSN is missing or incorrect, the IRS can immediately adjust your return without the usual audit process.