Working Families Tax Relief Act of 2015

To amend the Internal Revenue Code of 1986 to strengthen the earned income tax credit and make permanent certain tax provisions under the American Recovery and Reinvestment Act of 2009. 1. Short title This Act may be cited as the Working Families Tax Relief Act of 2015 2. Permanent extension of and modifications to the child tax credit (a) Permanent extension of increase in refundable portion (1) In general Clause (i) of section 24(d)(1)(B) $10,000 $3,000 (2) Conforming amendment Subsection (d) of section 24 of such Code is amended by striking paragraph (4). (3) Elimination of inflation adjustment Subsection (d) of section 24 of such Code is amended by striking paragraph (3). (b) Inflation adjustments Section 24 (g) Inflation adjustments (1) In general In the case of any taxable year beginning in a calendar year after 2014, the $1,000 amount in subsection (a) and each of the dollar amounts in subsection (b)(2) shall each be increased by an amount equal to— (A) such dollar amount, multiplied by (B) 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 2011 calendar year 1992 (2) Rounding Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2014. 3. Permanent extension of modifications to earned income tax credit (a) Increase in credit percentage for families with 3 or more children Paragraph (1) of section 32(b) (1) by striking The credit (A) In general The credit , and (2) by adding at the end the following new subparagraph: (B) Increased credit percentage for families with 3 or more qualifying children In the case of an eligible individual with 3 or more qualifying children, the table in subparagraph (A) shall be applied by substituting 45 40 . (b) Joint returns (1) In general Subparagraph (B) of section 32(b)(2) $3,000 $5,000. (2) Inflation adjustments Clause (ii) of section 32(j)(1)(B) of such Code is amended— (A) by striking $3,000 $5,000 (B) by striking subsection (b)(2)(B)(iii) subsection (b)(2)(B) (C) by striking calendar year 2007 calendar year 2008 (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 December 31, 2014. 4. Strengthening the earned income tax credit (a) Increased credit for individuals with no qualifying children (1) In general The table in subparagraph (A) of section 32(b)(2) (A) by striking $4,220 $8,820 (B) by striking $5,280 $10,425 (2) Inflation adjustments Subparagraph (B) of section 32(j)(1) (A) in clause (i)— (i) by inserting (except as provided in clause (iii)) (b)(2)(A) (ii) by striking and (B) by adding at the end the following new clause: (iii) in the case of the $8,820 and $10,4250 amount in the table in subsection (b)(2)(A), by substituting calendar year 2011 calendar year 1992 . (b) Credit increase and reduction in phaseout for individuals with no children The table contained in section 32(b)(1)(A) (1) by striking 7.65 15.3 (2) by striking 7.65 15.3 (c) Credit allowed for certain childless individuals over age 21 Subclause (II) of section 32(c)(1)(A)(ii) age 25 age 21 (d) Effective dates The amendments made by this section shall apply to taxable years beginning after December 31, 2014. 5. Simplifying the earned income tax credit (a) Modification of abandoned spouse rule (1) In general Section 32(c)(1) (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) (I) during the last 6 months of 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, shall not be considered as married. . (2) Conforming amendments (A) The last sentence of section 32(c)(1)(A) section 7703 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) 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) (b) Elimination of disqualified investment income test (1) In general Section 32 (2) Conforming amendments (A) Section 32(j)(1)(B)(i) of such Code, as amended by this Act, is amended— (i) by striking subsections subsection (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. . (c) 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) (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 custodial parent of such child who does not make such a claim of such 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) (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. . (d) Effective dates The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Summary: Working Families Tax Relief Act of 2015 Amends the Internal Revenue Code, as amended by the American Recovery and Reinvestment Act of 2009, to: (1) make permanent the reduction in the income threshold (from $10,000 to $3,000) for determining the refundable portion of the child tax credit, (2) eliminate the inflation adjustment to such amount, and (3) allow an annual inflation adjustment after 2014 to the $1,000 maximum credit amount and the adjusted gross income threshold amounts used to reduce the allowable amount of such credit. Modifies the earned income tax credit to: (1) make permanent the increase in the rate of such credit for taxpayers with three or more children, (2) increase the credit for taxpayers with no qualifying children, (3) reduce from 25 to 21 the qualifying age for such credit, (4) revise eligibility rules relating to married individuals living apart and qualifying children claimed by another family member, and (5) repeal the denial of such credit for taxpayers with excess investment income.