Children and Incapacitated Dependents Care Annual Refund (CIDCARE) Act

Summary: Children and Incapacitated Dependents Care Annual Refund (CIDCARE) Act - Amends the Internal Revenue Code to make the dependent care credit a refundable tax credit. 
Makes higher-income taxpayers ineligible for such credit. 
Allows employers to advance the payments of such credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children and Incapacitated 
Dependents Care Annual Refund (CIDCARE) Act''.

SEC. 2. DEPENDENT CARE CREDIT TO BE REFUNDABLE; ADVANCE PAYMENTS OF 
              CREDIT.

    (a) Credit To Be Refundable.--
            (1) In general.--Section 21 of the Internal Revenue Code of 
        1986 (relating to expenses for household and dependent care 
        services necessary for gainful employment) is hereby moved to 
        subpart C of part IV of subchapter A of chapter 1 of such Code 
        (relating to refundable credits) and inserted after section 34.
            (2) Technical amendments.--
                    (A) Section 35 of such Code is redesignated as 
                section 36.
                    (B) Section 21 of such Code is redesignated as 
                section 35.
                    (C) Paragraph (1) of section 35(a) of such Code (as 
                redesignated by subparagraph (B)) is amended by 
                striking ``this chapter'' and inserting ``this 
                subtitle''.
                    (D) Subparagraph (C) of section 129(a)(2) of such 
                Code is amended by striking ``section 21(e)'' and 
                inserting ``section 35(e)''.
                    (E) Paragraph (2) of section 129(b) of such Code is 
                amended by striking ``section 21(d)(2)'' and inserting 
                ``section 35(d)(2)''.
                    (F) Paragraph (1) of section 129(e) of such Code is 
                amended by striking ``section 21(b)(2)'' and inserting 
                ``section 35(b)(2)''.
                    (G) Subsection (e) of section 213 of such Code is 
                amended by striking ``section 21'' and inserting 
                ``section 35''.
                    (H) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``or from section 35 of such Code''.
                    (I) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 35 and inserting 
                the following:

                              ``Sec. 35. Expenses for household and 
                                        dependent care services 
                                        necessary for gainful 
                                        employment.
                              ``Sec. 36. Overpayments of tax.''
                    (J) The table of sections for subpart A of such 
                part IV is amended by striking the item relating to 
                section 21.
    (b) Higher-Income Taxpayers Ineligible for Credit.--Subsection (a) 
of section 35 of such Code, as redesignated by subsection (a), is 
amended by adding at the end the following new paragraph:
            ``(3) Phaseout of credit for higher-income taxpayers.--The 
        amount of the credit which would (but for this paragraph) be 
        allowed by this section shall be reduced (but not below zero) 
        by an amount which bears the same ratio to such amount of 
        credit as the excess of the taxpayer's adjusted gross income 
        for the taxable year over $110,000 bears to $10,000. Any 
        reduction determined under the preceding sentence which is not 
        a multiple of $10 shall be rounded to the nearest multiple of 
        $10.''
    (c) Advance Payment of Credit.--
            (1) In general.--Chapter 25 of such Code (relating to 
        general provisions relating to employment taxes) is amended by 
        inserting after section 3507 the following new section:

``SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE CREDIT.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages to an employee with respect to 
whom a dependent care credit eligibility certificate is in effect 
shall, at the time of paying such wages, make an additional payment 
equal to such employee's dependent care credit advance amount.
    ``(b) Dependent Care Credit Eligibility Certificate.--For purposes 
of this title, a dependent care credit eligibility certificate is a 
statement furnished by an employee to the employer which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 35 for the taxable year,
            ``(2) certifies that the employee does not have a dependent 
        care credit eligibility certificate in effect for the calendar 
        year with respect to the payment of wages by another employer,
            ``(3) states whether or not the employee's spouse has a 
        dependent care credit eligibility certificate in effect, and
            ``(4) estimates the amount of dependent care credit of the 
        employee for the calendar year.
For purposes of this section, a certificate shall be treated as being 
in effect with respect to a spouse if such a certificate will be in 
effect on the first status determination date following the date on 
which the employee furnishes the statement in question.
    ``(c) Dependent Care Credit Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `dependent care credit advance amount' means, with respect to 
        any payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                amount of dependent care credit included in the 
                dependent care credit eligibility certificate, and
                    ``(C) in accordance with tables provided by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(C) shall be similar in form to the tables 
        prescribed under section 3402 and, to the maximum extent 
        feasible, shall be coordinated with such tables and the tables 
        prescribed under section 3507(c).
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
            (2) Clerical amendment.--The table of sections for chapter 
        25 of such Code is amended by inserting after the item relating 
        to section 3507 the following new item:

                              ``Sec. 3507A. Advance payment of 
                                        dependent care credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.