A bill to amend the Internal Revenue Code of 1986 to strengthen the earned income tax credit.

Summary: Strengthen the Earned Income Tax Credit Act of 2011 - Amends the Internal Revenue Code to: (1) make permanent the reduction in the marriage penalty applicable to the earned income tax credit, (2) increase such tax credit for families with three or more qualifying children and for individuals with no qualifying children, (3) extend such credit to individuals at age 21 (currently age 25) who do not have a qualifying child, (4) allow such credit for certain married individuals who live apart from their spouses and file separate tax returns (abandoned spouse rule), (5) repeal provisions denying such credit for individuals with excessive investment income, and (6) increase to $500 the penalty on tax return preparers for failure to be diligent in determining eligibility for the earned income tax credit.

Makes permanent provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 relating to the earned income tax credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strengthen the Earned Income Tax 
Credit Act of 2011''.

SEC. 2. STRENGTHEN THE EARNED INCOME TAX CREDIT.

    (a) Permanent Extension of Marriage Penalty Relief and Increase in 
Credit for Certain Families.--
            (1) Reduction in marriage penalty.--
                    (A) In general.--Subparagraph (B) of section 
                32(b)(2) of the Internal Revenue Code of 1986 is 
                amended by striking ``increased by'' and all that 
                follows and inserting ``increased by $5,000.''.
                    (B) Inflation adjustment.--Clause (ii) of section 
                32(j)(1)(B) of such Code is amended--
                            (i) by striking ``$3,000 amount in 
                        subsection (b)(2)(B)(iii)'' and inserting 
                        ``$5,000 amount in subsection (b)(2)(B)'', and
                            (ii) by striking ``calendar year 2007'' and 
                        inserting ``calendar year 2008''.
            (2) Increase in credit percentage for families with 3 or 
        more children.--The table contained in section 32(b)(1)(A) of 
        the Internal Revenue Code of 1986 (relating to percentages) is 
        amended--
                    (A) by striking ``2 or more qualifying children'' 
                in the second row and inserting ``2 qualifying 
                children'', and
                    (B) by inserting after the second row the following 
                new item:


``3 or more qualifying children...............           45     21.06''.
 

            (3) Conforming amendment.--Section 32(b) of such Code is 
        amended by striking paragraph (3).
    (b) Increased Credit for Individuals With No Qualifying Children.--
            (1) In general.--The table in subparagraph (A) of section 
        32(b)(2) of the Internal Revenue Code of 1986 is amended by 
        striking ``$5,280'' in the last column and inserting 
        ``$12,690''.
            (2) Inflation adjustments.--Subparagraph (B) of section 
        32(j)(1) of the Internal Revenue Code of 1986, as amended by 
        subsection (a), is amended--
                    (A) in clause (i)--
                            (i) by inserting ``(except as provided in 
                        clause (iii))'' after ``(b)(2)(A)'', and
                            (ii) by striking ``and'' at the end, and
                    (B) by adding at the end the following new clause:
                            ``(iii) in the case of the $12,690 amount 
                        in the table in subsection (b)(2)(A), by 
                        substituting `calendar year 2010' for `calendar 
                        year 1992' in subparagraph (B) of such section 
                        1.''.
    (c) Credit Increase and Reduction in Phaseout for Individuals With 
No Children.--The table contained in section 32(b)(1)(A) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``7.65'' in the second column of the third 
        row and inserting ``15.3'', and
            (2) by striking ``7.65'' in the third column of the third 
        row and inserting ``15.3''.
    (d) Credit Allowed for Certain Childless Individuals Over Age 21.--
Subclause (II) of section 32(c)(1)(A)(ii) of the Internal Revenue Code 
of 1986 (relating to eligible individual) is amended by striking ``age 
25'' and inserting ``age 21''.
    (e) Modification of Abandoned Spouse Rule.--
            (1) In general.--Section 32(c)(1) of the Internal Revenue 
        Code of 1986 (relating to eligible individual) is amended by 
        adding at the end the following new paragraph:
                    ``(G) Certain married individuals living apart.--
                For purposes of this section, an individual who--
                            ``(i) is married (within the meaning of 
                        section 7703(a)) and files a separate return 
                        for the taxable year,
                            ``(ii) lives with a qualifying child of the 
                        individual for more than one-half of such 
                        taxable year, and
                            ``(iii) during the last 6 months of such 
                        taxable year, does not have the same principal 
                        place of abode as the individual's spouse, 
                        shall not be considered as married.''.
            (2) Conforming amendments.--
                    (A) The last sentence of section 32(c)(1)(A) of the 
                Internal Revenue Code of 1986 is amended by striking 
                ``section 7703'' and inserting ``section 7703(a)''.
                    (B) Section 32(d) of such Code is amended by 
                striking ``In the case of an individual who is married 
                (within the meaning of section 7703)'' and inserting 
                ``In the case of an individual who is married (within 
                the meaning of section 7703(a)) and is not described in 
                subsection (c)(1)(G)''.
    (f) Elimination of Disqualified Investment Income Test.--
            (1) In general.--Section 32 of the Internal Revenue Code of 
        1986 is amended by striking subsection (i).
            (2) Conforming amendments.--
                    (A) Section 32(j)(1)(B)(i) of such Code, as amended 
                by this Act, is amended--
                            (i) by striking ``subsections'' and 
                        inserting ``subsection'', and
                            (ii) by striking ``and (i)(1)''.
                    (B) Section 32(j)(2) of such Code is amended to 
                read as follows:
            ``(2) Rounding.--If any dollar amount in subsection 
        (b)(2)(A) (after being increased under subparagraph (B) 
        thereof), after being increased under paragraph (1), is not a 
        multiple of $10, such amount shall be rounded to the next 
        nearest multiple of $10.''.
    (g) Simplification of Rules Regarding Presence of Qualifying 
Child.--
            (1) Taxpayer eligible for credit for worker without 
        qualifying child if qualifying child claimed by another member 
        of family.--Section 32(c)(1) of the Internal Revenue Code of 
        1986 (relating to eligible individual), as amended by this Act, 
        is amended by adding at the end the following new paragraph:
                    ``(H) Taxpayer eligible for credit for worker 
                without qualifying child if qualifying child claimed by 
                another member of family.--
                            ``(i) General rule.--Except as provided in 
                        clause (ii), in the case of 2 or more eligible 
                        individuals who may claim for such taxable year 
                        the same individual as a qualifying child, if 
                        such individual is claimed as a qualifying 
                        child by such an eligible individual, then any 
                        other such eligible individual who does not 
                        make such a claim of such child or of any other 
                        qualifying child may be considered an eligible 
                        individual without a qualifying child for 
                        purposes of the credit allowed under this 
                        section for such taxable year.
                            ``(ii) Exception if qualifying child 
                        claimed by parent.--If an individual is claimed 
                        as a qualifying child for any taxable year by 
                        an eligible individual who is a parent of such 
                        child, then no other parent of such child who 
                        does not make such a claim of such child or of 
                        any other qualifying child may be considered an 
                        eligible individual without a qualifying child 
                        for purposes of the credit allowed under this 
                        section for such taxable year.''.
            (2) Taxpayer eligible for credit for worker without 
        qualifying child if qualifying children do not have valid 
        social security number.--Subparagraph (F) of section 32(c)(1) 
        of the Internal Revenue Code of 1986 is amended to read as 
        follows:
                    ``(F) Individuals who do not include tin, etc., of 
                any qualifying child.--In the case of any eligible 
                individual who has one or more qualifying children, if 
                no qualifying child of such individual is taken into 
                account under subsection (b) by reason of paragraph 
                (3)(D), for purposes of the credit allowed under this 
                section, such individual may be considered an eligible 
                individual without a qualifying child.''.
    (h) Increased Penalty for Failure To Be Diligent in Determining 
Eligibility for Earned Income Credit.--Section 6695(g) of the Internal 
Revenue Code of 1986 is amended by striking ``$100'' and inserting 
``$500''.
    (i) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2010.
            (2) Increased penalty.--The amendment made by subsection 
        (h) shall apply to returns required to be filed after December 
        31, 2011.
    (j) Repeal of EGTRRA Sunset.--Title IX of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 (relating to sunset provisions of 
such Act) shall not apply to section 303 of such Act.