Earned Income Tax Credit Improvement and Simplification Act 2015

To amend the Internal Revenue Code of 1986 to make improvements in the earned income tax credit. 1. Short title; table of contents (a) Short title This Act may be cited as the Earned Income Tax Credit Improvement and Simplification Act 2015 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Certain improvements in the earned income tax credit made permanent. Sec. 3. Strengthening the earned income tax credit for individuals with no qualifying children. Sec. 4. Taxpayer eligible for credit for individuals with no qualifying children if qualifying children do not have valid Social Security numbers. Sec. 5. Credit allowed in case of certain separated spouses. Sec. 6. Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family. Sec. 7. Elimination of disqualified investment income test. 2. Certain improvements in the earned income tax credit made permanent (a) Increase in credit percentage for three or more qualifying children made permanent Section 32(b)(1) (1) Percentages The credit percentage and the phaseout percentage shall be determined in accordance with the following table: In the case of The credit The phaseout 1 qualifying child 34 15.98 2 qualifying children 40 21.06 3 or more qualifying children 45 21.06 No qualifying children 7.65 7.65 . (b) Reduction of marriage penalty made permanent (1) In general Section 32(b)(2)(B) of such Code is amended to read as follows: (B) Joint returns (i) In general In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000. (ii) Inflation adjustment In the case of any taxable year beginning after 2014, the $5,000 amount in clause (i) shall be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost of living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2009 calendar year 1992 (iii) Rounding Subparagraph (A) of subsection (j)(2) shall apply after taking into account any increase under clause (ii). . (c) Conforming amendment Section 32(b) of such Code is amended by striking paragraph (3). (d) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 3. Strengthening the earned income tax credit for individuals with no qualifying children (a) Credit for certain individuals over age 21 (1) In general Section 32(c)(1) (G) Special rule for working individuals over age 20 and without qualifying child (i) In general In the case of an individual (or, if the individual is married, either the individual or the individual’s spouse) who— (I) has attained the age of 21 but not attained age 25 before the close of the taxable year, and (II) is not a full-time student at any time during the taxable year, paragraph (1)(A)(ii)(II) shall not apply for purposes of determining whether such individual is an eligible individual. (ii) Student For purposes of this subparagraph, an individual shall be considered a full-time student if such individual is carrying more than 1/2 . (2) Information return matching Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall develop and implement procedures for checking an individual’s claim for a credit under section 32 (b) Increased credit (1) Credit percentage and phaseout percentage The table contained in section 32(b)(1)(A) of such Code, as amended by this Act, is amended by striking 7.65 15.3 (2) Earned income amount and phaseout amount (A) In general The table contained in section 32(b)(2)(A) of such Code is amended— (i) by striking $4,220 $8,820 (ii) by striking $5,280 $10,425 (B) Inflation adjustments Section 32(j)(1)(B) of such Code is amended— (i) by inserting except as provided in clause (iii) in the case of amounts (ii) by striking and , and (iii) in the case of the $8,820 and $10,425 amounts in subsection (b)(2)(A), by substituting calendar year 2012 calendar year 1992 . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 4. Taxpayer eligible for credit for individuals with no qualifying children if qualifying children do not have valid Social Security numbers (a) In general Section 32(c)(1)(F) (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— (i) no qualifying child of such individual is taken into account under subsection (b) by reason of paragraph (3)(D), and (ii) no child of such individual is taken into account for purposes of any other child tax benefit under this chapter, for purposes of the credit allowed under this section, such individual may be considered an eligible individual without a qualifying child. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2014. 5. Credit allowed in case of certain separated spouses (a) In general Section 32(d) (1) by striking Married individuals.— Married individuals.— (1) In general In the case of , and (2) by adding at the end the following new paragraph: (2) Special rule for separated spouse An individual shall not be treated as married for purposes of this section if such individual— (A) is married (within the meaning of section 7703(a)) and files a separate return for the taxable year, (B) lives with a qualifying child of the individual for more than one-half of such taxable year, and (C) (i) during the last 6 months such taxable year, does not have the same principal place of abode as the individual’s spouse, or (ii) has a legally binding separation agreement with the individual’s spouse and is not a member of the same household with the individual’s spouse by the end of the taxable year. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 6. Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family (a) In general Section 32(c)(1) (G) Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family (i) In general If— (I) an individual is claimed as a qualifying child by an eligible individual for any taxable year of such eligible individual beginning in a calendar year, and (II) such individual is the qualifying child of another eligible individual for any taxable year beginning in such calendar year, such other eligible individual may be treated as an eligible individual without a qualifying child for purposes of this section for such taxable year. (ii) Exception for qualifying child claimed by parent If an individual is claimed as a qualifying child for any taxable year by a parent of such child, clause (i) shall not apply with respect to any other custodial parent of such child. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 7. Elimination of disqualified investment income test (a) In general Section 32 (b) Conforming amendments (1) Section 32(j)(1)(B)(i) of such Code is amended by striking subsections (b)(2)(A) and (i)(1) subsection (b)(2)(A) (2) Section 32(j)(2) of such Code is amended— (A) by striking paragraph (2), and (B) by striking Rounding.— If any dollar amount Rounding.— (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Earned Income Tax Credit Improvement and Simplification Act 2015 Amends the Internal Revenue Code, with respect to the earned income tax credit, to: (1) make permanent the increase in the rate of such credit for taxpayers with three or more qualifying children and the reduction in the amount of the marriage penalty for such credit; (2) allow such credit for an individual with no qualifying children who has attained the age of 21 but not 25 and is not a full-time student, and whose qualifying children do not have valid social security numbers; (3) revise eligibility rules relating to married individuals living apart and qualifying children claimed by another family member; and (4) repeal the denial of such credit for taxpayers with excess investment income.