When the CARES Act was enacted on March 27, it stabilized the financial health of millions of families facing massive unemployment and other economic hardships in the wake of COVID-19. Unfortunately, it also left millions of American families out of the law’s broadest relief provision — Economic Impact Payments. Unless Congress takes action, those same families will fall through the same crack a second time.
According to the eligibility rules of the CARES Act and the newly proposed “HEALS Act,” individuals are required to have a valid Social Security number in order to be eligible for an Economic Impact Payment. For couples who file their taxes jointly, both spouses must have a Social Security number in order to be eligible. This means that if one of the spouses is an immigrant without a Social Security number, the entire family is deemed ineligible for an Economic Impact Payment. This is true even if the rest of the immigrant’s family is comprised of U.S. citizens. It is even true if the immigrant parent pays taxes and has an Individual Taxpayer Identification Number (ITIN) from the IRS.
So, even if you’re a U.S. citizen, your children are U.S. citizens, and your partner is a U.S. taxpayer with a legal immigration status, your entire family may be ineligible for an Economic Impact Payment under the eligibility requirements from the CARES Act and the HEALS Act.
For a family of four with three U.S. citizens and one non-citizen parent, this could mean missing out on $2,200 worth of economic relief, even if the non-citizen parent is not eligible for relief themselves.
According to the Migration Policy Institute, these eligibility requirements exclude almost 15.4 million people in mixed-status households. Of these, 3.7 million are children who are either U.S. citizens or green-card holders, 1.7 million are spouses who are either U.S. citizens or green-card holders, and 9.9 million are undocumented immigrants. In total, it is estimated that 5.5 million U.S. citizens and green-card holders are excluded from receiving Economic Impact Payments for which they might otherwise be eligible.
As the pandemic continues and unemployment remains at record levels, these payments may prove critical to millions of families’ ability to make ends meet. Research over the last several months from the Federal Reserve Bank of Philadelphia and our own U.S. Financial Health Pulse indicates that many recipients of these payments are using them for essential purchases like food and medicine. This usage is particularly common for those with lower incomes, people of color, and the Financially Vulnerable.
In recognition of this issue, several proposals have emerged to broaden eligibility for Economic Impact Payments. House Democrats have proposed expanding eligibility to immigrants with an ITIN, including some undocumented immigrants. While this may be a challenge politically, it has the benefit of including all taxpayers and their children, including some American children whose parents are non-citizens. Meanwhile, a group of Republican lawmakers introduced a bill in late June that maintains the Social Security number requirement, but allows U.S. citizens who are the spouses of non-citizens to receive their Economic Impact Payment as if they were a single tax filer. This bill limits their payment to $1,200 rather than the $2,400 other couples who file jointly can receive, but would also expand eligibility to the American children of mixed-status couples. According to the Migration Policy Institute, this fix would expand eligibility to approximately 3.5 million of the 5.5 million U.S. citizens and green-card holders who are currently excluded, but would not cover American children with only non-citizen parents, even if one or both of those parents are taxpayers.
Unfortunately, the newly proposed HEALS Act incorporates neither of these proposals, opting instead to keep the eligibility requirements from the CARES Act unchanged. That may simply be an oversight due to drafting the HEALS Act at the eleventh hour, but it is an oversight that should be corrected in any final bill. While it may not be possible to eliminate all the structural barriers that stand between mixed-status families and economic relief in time for the next stimulus package, lawmakers’ goal should be to support the financial health of as many families as they can during this unique crisis.
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