Beginning with the 2026 Schedule 3-A (Form 1040), taxpayers claiming certain refundable tax credits may see a new question asking whether they want to receive a federal public benefit. The program includes a new "Check here to opt out of refundable credits" checkbox that allows taxpayers to choose not to receive the refundable portion of certain credits. This election may reduce or eliminate part of a refund.
What is a federal public benefit?
'Federal Public Benefits' are restricted to U.S. citizens, U.S. nationals, or qualified aliens. This impacts certain noncitizens who are legally authorized to live and work in the U.S. Even though the classification targets specific noncitizen eligibility, the form and corresponding line items (such as line 32b on Form 1040) require all taxpayers claiming these refundable credits to answer the new question.
For Schedule 3-A purposes, it is the portion of certain refundable credits that the IRS identifies as a federal public benefit under the Schedule 3-A rules.
What is Schedule 3-A?
Schedule 3-A (Form 1040), Federal Public Benefit, is a new IRS schedule used to determine whether the refunded portion of certain refundable tax credits is considered a federal public benefit.
You may need to complete Schedule 3-A if you claim one or more of the following credits:
- Earned Income Credit (EIC)
- Additional Child Tax Credit (ACTC)
- Refundable American Opportunity Credit
- Refundable Adoption Credit
Schedule 3-A does not determine whether you qualify for these credits. Instead, it determines whether part of the refund generated by those credits is treated as a federal public benefit.
What is Schedule 3-A, line 7?
Line 7 asks:
"Do you want to receive your federal public benefit?"
If Schedule 3-A determines that part of your refund is considered a federal public benefit, Line 7 allows you to decide whether you want to receive that amount.
- Yes – Continue to the next eligibility step.
- No – You are choosing not to receive the federal public benefit amount.
How does this affect my tax refund?
Selecting the checkbox may reduce your refund.
If Schedule 3-A calculates a federal public benefit amount and you choose No on Line 7, that amount is not included in the refund you receive. The IRS draft instructions indicate that the amount is carried to Form 1040, Line 32b.
Example
Assume:
- You qualify for the Earned Income Credit.
- Schedule 3-A calculates a federal public benefit amount of $1,200.
- You select "Check here to opt out of refundable credits."
The $1,200 federal public benefit amount is reported on Form 1040 Line 32b and is not paid as part of your refund.
Where is the amount reported on Form 1040?
Schedule 3-A may affect:
Form 1040 Line 32b
Line 32b is used to report a federal public benefit amount that will not be received.
An amount may appear on Line 32b if:
- You have a federal public benefit amount on Schedule 3-A and choose No on Line 7, or
- You choose Yes on Line 7 but do not meet the eligibility requirements in Part II of Schedule 3-A.
If you meet all Schedule 3-A requirements and are eligible to receive the benefit, Line 32b will generally be zero.
Why would someone choose to opt out of refundable credits?
Some taxpayers may choose not to receive the federal public benefit amount even though they qualify for a refundable credit.
The IRS created Line 7 to allow taxpayers to make that choice. The program's checkbox provides a simple way to indicate that election on the return.
How do I enter this in the program?
Navigation
Federal > Personal Information > Taxpayer Information
Steps
- Open the Taxpayer Information section.
- Continue through the personal information screens.
- Locate the checkbox labeled: "Check here to opt out of refundable credits."
- Check the box if you do not want to receive refundable federal public benefit amounts.
Frequently Asked Questions
Does this remove my credit?
You may still qualify for the underlying credit. Schedule 3-A only determines whether the refundable federal public benefit portion is received.
Will this reduce my refund?
If Schedule 3-A calculates a federal public benefit amount, opting out may reduce your refund by that amount.
What happens if I do not select the checkbox?
The return continues with the Schedule 3-A process, and the Line 7 answer remains Yes.
Can I still receive the Earned Income Credit (EIC)?
Your eligibility for the Earned Income Credit is determined separately. Schedule 3-A only determines whether a refundable federal public benefit amount can be received.
How can I tell if Schedule 3-A affects my return?
Review:
- Schedule 3-A
- Schedule 3-A Line 6
- Schedule 3-A Line 7
- Form 1040 Line 32b
These lines show whether a federal public benefit amount was calculated and whether it was included in your refund.