Foster Care Tax Credit Act

Summary: Foster Care Tax Credit Act   This bill amends the Internal Revenue Code to allow a partially refundable tax credit for each qualifying foster child who resides in the home of an eligible taxpayer for at least one calendar month during the taxable year.  A &quot;qualifying foster child&quot; is a child in foster care who: (1) has not attained age 17; (2) is a citizen, national, or resident of the United States; and (3) with respect to whom the child tax credit is not allowable.  In order to claim the credit, the name and taxpayer identification number of a foster child must be included on the taxpayer's tax return. No credit is allowed if the identification number of either the taxpayer or the qualifying child was issued after the due date for filing the return for the taxable year.  The bill denies the tax credit to certain taxpayers who have made prior fraudulent or reckless claims for the credit within specified disallowance periods. The Department of Health and Human Services must identify provisions in the Internal Revenue Code that can benefit foster families and increase outreach efforts to inform state and Indian tribal foster care agencies and foster families about such provisions. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Foster Care Tax Credit Act''.

SEC. 2. FOSTER CARE TAX CREDIT.

    (a) Allowance of Credit.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 25D the following new section:

``SEC. 25E. FOSTER CARE TAX CREDIT.

    ``(a) Allowance of Credit.--With respect to each qualifying foster 
child of an eligible taxpayer, for each calendar month occurring during 
the taxable year that such child resides in the home of such taxpayer, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to \1/12\ of the amount 
determined under subsection (b).
    ``(b) Amount Determined.--
            ``(1) In general.--The amount determined under this 
        subsection with respect to an eligible taxpayer and a taxable 
        year is--
                    ``(A) $1,000, reduced by
                    ``(B) $50 for each $1,000 (or fraction thereof) by 
                which the eligible taxpayer's modified adjusted gross 
                income exceeds the threshold amount.
        For purposes of the preceding sentence, the term `modified 
        adjusted gross income' means adjusted gross income increased by 
        any amount excluded from gross income under section 911, 931, 
        or 933.
            ``(2) Threshold amount.--For purposes of paragraph (1), the 
        term `threshold amount' has the meaning given such term by 
        section 24(b)(2).
    ``(c) Qualifying Foster Child.--For purposes of this section, the 
term `qualifying foster child' means an eligible foster child (within 
the meaning of section 152(f)(1)(C)) of the eligible taxpayer--
            ``(1) who has not attained age 17,
            ``(2) who is a citizen, national, or resident of the United 
        States,
            ``(3) who resides in the home of the eligible taxpayer for 
        not less than 1 calendar month during the taxable year, and
            ``(4) with respect to whom the credit under section 24 is 
        not allowable to the eligible taxpayer or any other taxpayer 
        who would be an eligible taxpayer but for paragraph (3) of 
        subsection (d).
    ``(d) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means any taxpayer, except that--
            ``(1) no single household shall include more than 1 
        eligible taxpayer,
            ``(2) married individuals filing a joint return shall be 
        treated as 1 eligible taxpayer, and
            ``(3) in the case of individuals not described in paragraph 
        (2) who are members of the same household, only the taxpayer 
        with the highest adjusted gross income for the taxable year 
        shall be treated as an eligible taxpayer.
    ``(e) Calendar Month.--For purposes of this section, if a foster 
child resides in the home of the taxpayer for more than 15 consecutive 
days of a calendar month but fewer than the total number of days in 
such calendar month, such foster child shall be treated as residing in 
the home of the taxpayer for the full calendar month.
    ``(f) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 26(a) (determined after any 
                reduction of the credit under section 24(a) by reason 
                of section 24(d)), or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection, and after any reduction of 
                the credit under section 24(a) by reason of section 
                24(d)) would increase if the limitation imposed by 
                section 26(a) were increased by the greater of--
                            ``(i) 15 percent of so much of the 
                        taxpayer's earned income (within the meaning of 
                        section 32) which is taken into account in 
                        computing taxable income for the taxable year 
                        as exceeds $3,000, or
                            ``(ii) in the case of a taxpayer with 3 or 
                        more qualifying foster children residing in the 
                        home of the taxpayer for all months in the 
                        taxable year (without regard to whether the 
                        same 3 children reside in the home of the 
                        taxpayer for all such months), the excess (if 
                        any) of--
                                    ``(I) the taxpayer's social 
                                security taxes for the taxable year, 
                                over
                                    ``(II) the credit allowed under 
                                section 32 for the taxable year.
                        The amount of the credit allowed under this 
                        subsection shall not be treated as a credit 
                        allowed under this subpart and shall reduce the 
                        amount of credit otherwise allowable under 
                        subsection (a) without regard to section 26(a). 
                        For purposes of subparagraph (B), any amount 
                        excluded from gross income by reason of section 
                        112 shall be treated as earned income which is 
                        taken into account in computing taxable income 
                        for the taxable year.
            ``(2) Social security taxes.--For purposes of paragraph 
        (1), the term `social security taxes' has the same meaning as 
        when used in section 24(d)(1).
    ``(g) Identification Requirements.--
            ``(1) Qualifying child identification requirement.--No 
        credit shall be allowed under this section to an eligible 
        taxpayer with respect to any qualifying foster child unless the 
        taxpayer includes the name and taxpayer identification number 
        of such qualifying foster child on the return of tax for the 
        taxable year and such taxpayer identification number was issued 
        on or before the due date for filing such return.
            ``(2) Taxpayer identification requirement.--No credit shall 
        be allowed under this section if the identifying number of the 
        eligible taxpayer was issued after the due date for filing the 
        return for the taxable year.
    ``(h) Restrictions on Taxpayers Who Improperly Claimed Credit in 
Prior Year.--
            ``(1) Taxpayers making prior fraudulent or reckless 
        claims.--
                    ``(A) In general.--No credit shall be allowed under 
                this section for any taxable year in the disallowance 
                period.
                    ``(B) Disallowance period.--For purposes of 
                subparagraph (A), the disallowance period is--
                            ``(i) the period of 10 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        fraud, and
                            ``(ii) the period of 2 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        reckless or intentional disregard of rules and 
                        regulations (but not due to fraud).
            ``(2) Taxpayers making improper prior claims.--In the case 
        of a taxpayer who is denied credit under this section for any 
        taxable year as a result of the deficiency procedures under 
        subchapter B of chapter 63, no credit shall be allowed under 
        this section for any subsequent taxable year unless the 
        taxpayer provides such information as the Secretary may require 
        to demonstrate eligibility for such credit.''.
            (2) Conforming amendments.--
                    (A) Section 6211(b)(4) of the Internal Revenue Code 
                of 1986 is amended by ``inserting 25E(f),'' before 
                ``32,''.
                    (B) Section 1324(b)(2) of title 31, United States 
                Code, is amended by inserting ``25E,'' after ``25A,''.
                    (C) The table of sections for subpart A of part IV 
                of subchapter A of chapter 1 of the Internal Revenue 
                Code of 1986 is amended by inserting after the item 
                relating to section 25D the following new item:

``Sec. 25E. Foster care tax credit.''.
    (b) Application of Tax Return Preparer Due Diligence Penalty.--
Section 6695(g) of the Internal Revenue Code of 1986 is amended by 
inserting ``25E,'' after ``25A(a)(1),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to calendar months beginning after December 31, 2017, in taxable 
years beginning after such date.
    (d) Education.--The Secretary of Health and Human Services (or the 
Secretary's delegate), in coordination with the Secretary of the 
Treasury or such Secretary's delegate, shall identify provisions in the 
Internal Revenue Code of 1986 that can be used by or can benefit foster 
families, and shall increase outreach efforts to provide information 
and educational materials regarding such provisions to State and Indian 
tribal foster care agencies and to foster families.