Hurricane Harvey and Hurricane Irma Working Family Tax Relief Act

To amend the Internal Revenue Code of 1986 to modify the determination of earned income for purposes of the earned income credit and the child tax credit for individuals in the Hurricane Harvey and Hurricane Irma disaster areas. 1. Short title This Act may be cited as the Hurricane Harvey and Hurricane Irma Working Family Tax Relief Act 2. Determination of earned income for purposes of the earned income credit and the child tax credit for individuals in the Hurricane Harvey and Hurricane Irma disaster areas (a) Earned income credit Section 32 (n) Special rule relating to Hurricane Harvey and Hurricane Irma For purposes of this section and section 24(d)— (1) In general In the case of a qualified individual, if the earned income of the taxpayer for the taxable year which includes the applicable date is less than the earned income of the taxpayer for the preceding taxable year, the credit allowed under subsection (a) for the taxable year which includes the applicable date may, at the election of the taxpayer, be determined by substituting— (A) such earned income for the preceding taxable year, for (B) such earned income for the taxable year which includes the applicable date. (2) Qualified individual For purposes of this subsection, the term qualified individual (A) whose principal place of abode on the applicable date was located in the Hurricane Harvey disaster area or the Hurricane Irma disaster area and such individual was displaced from such principal place of abode by reason of the Hurricane Harvey federally declared disaster or the Hurricane Irma federally declared disaster, respectively, or (B) who performed substantially all employment services in the disaster area and was so employed on the applicable date. (3) Other definitions For purposes of this subsection— (A) Applicable date The term applicable date (i) August 25, 2017, with respect to Hurricane Harvey, and (ii) September 5, 2017, with respect to Hurricane Irma. (B) Hurricane Harvey federally declared disaster (i) In general The term Hurricane Harvey federally declared disaster (ii) Hurricane Harvey disaster area The term Hurricane Harvey disaster area (C) Hurricane Irma federally declared disaster (i) In general The term Hurricane Irma federally declared disaster (ii) Hurricane Irma disaster area The term Hurricane Irma disaster area (4) Special rules (A) Application to joint returns For purposes of paragraph (1), in the case of a joint return for a taxable year which includes the applicable date— (i) such paragraph shall apply if either spouse is a qualified individual, and (ii) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year. (B) Uniform application of election Any election made under paragraph (1) shall apply with respect to both this section and section 24(d). (C) Errors treated as mathematical error For purposes of section 6213, an incorrect use on a return of earned income pursuant to paragraph (1) shall be treated as a mathematical or clerical error. (D) No effect on determination of gross income, etc Except as otherwise provided in this subsection, this title shall be applied without regard to any substitution under paragraph (1). . (b) Child tax credit Subsection (d) of section 24 of such Code is amended by adding at the end the following new paragraph: (6) Special rule relating to Hurricane Harvey and Hurricane Irma See section 32(n) for determination of earned income with respect to the Hurricane Harvey and Hurricane Irma federally declared disasters. . (c) Treatment of possessions (1) Payments to possessions (A) Mirror code possession The Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the amendments made by this section. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (B) Other possessions The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the amendments made by this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession. (2) Coordination with credit allowed against United States income taxes In the case of any person— (A) to whom a credit is allowed against taxes imposed by a possession of the United States by reason of the amendments made by this section for any taxable year, or (B) who is eligible for a payment under a plan described in paragraph (1)(B) with respect to any taxable year, any credit allowed under section 24 or 32 of the Internal Revenue Code of 1986 to such person for such taxable year shall be determined without regard to the amendments made by this section. (3) Definitions and special rules (A) Possession of the United States For purposes of this subsection, the term possession of the United States (B) Mirror code tax system For purposes of this subsection, the term mirror code tax system (C) Treatment of payments For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit allowed under section 24(d) or 32 of the Internal Revenue Code of 1986. (d) Effective date The amendments made by this section shall apply to taxable years ending after August 25, 2017.

Summary: Hurricane Harvey and Hurricane Irma Working Family Tax Relief Act This bill amends the Internal Revenue Code to allow certain individuals affected by Hurricanes Harvey or Irma to elect to use earned income from the preceding year for the purpose of determining earned income for the earned income tax credit and the child tax credit. The bill applies to an individual: (1) whose principal place of abode on specified dates was located in the Hurricane Harvey disaster area or the Hurricane Irma disaster area, (2) who was displaced from the place of abode due to the disaster, and (3) who performed substantially all employment services in the disaster area and was so employed on the specified date. The Department of the Treasury must pay to each U.S. possession with a tax system that mirrors federal tax law (mirror code tax system) amounts equal to the loss to the possession due to this bill. For U.S. possessions that do not have a mirror code tax system, Treasury must pay an amount equal to the aggregate benefits that would have been provided to residents of the possession due to this bill if a mirror code tax system had been in effect.