Working Families Tax Relief Act of 2017

To amend the Internal Revenue Code of 1986 to strengthen the earned income tax credit and the child tax credit. 1. Short title This Act may be cited as the Working Families Tax Relief Act of 2017 2. 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 $9,230 (B) by striking $5,280 $10,900 (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) in clause (ii), by striking the period at the end and inserting , and (C) by adding at the end the following new clause: (iii) in the case of the $9,230 and $10,900 amounts in the table in subsection (b)(2)(A), by substituting calendar year 2016 calendar year 1992 . (b) Credit increase and reduction in phaseout for individuals with no children The table contained in section 32(b)(1) (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, 2016. 3. Strengthening the child tax credit (a) Increase in amount of credit for taxpayers with young children Subsection (a) of section 24 (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of— (1) with respect to each qualifying child of the taxpayer who has not attained 6 years of age before the close of such taxable year and for which the taxpayer is allowed a deduction under section 151, an amount equal to $3,000, and (2) with respect to each qualifying child of the taxpayer who has attained 6 years of age before the close of such taxable year and for which the taxpayer is allowed a deduction under section 151, an amount equal to $1,000. . (b) Increase in portion of credit refundable for taxpayers with young children Clause (i) of section 24(d)(1)(B) (i) (I) in the case of a taxpayer with a qualifying child who has not attained 6 years of age before the close of the taxable year, 45 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, or (II) in the case of a taxpayer not described in subclause (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 . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016. 4. Indexing the child tax credit for inflation (a) Inflation adjustments Section 24 (h) Inflation adjustments (1) In general In the case of any taxable year beginning in a calendar year after 2017, each of the dollar amounts in subsections (a) and (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 2016 calendar year 1992 (2) Rounding Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2017. 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 by striking subsections (b)(2)(A) and (i)(1) subsection (b)(2)(A) (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, 2016.

Summary: Working Families Tax Relief Act of 2017 This bill amends the Internal Revenue Code, with respect to the earned income tax credit, to: (1) increase the credit and reduce the phaseout percentage for taxpayers with no qualifying children, (2) reduce from 25 to 21 the qualifying age for individuals with no children, (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. This bill modifies the child tax credit to: (1) increase the amount of the credit and the portion of the credit that is refundable for taxpayers with children under the age of six, and (2) require the dollar amounts of the credit to be adjusted for inflation after 2017.