Tax Fairness for Disaster Victims Act

To amend the Internal Revenue Code of 1986 to provide a lookback rule in the case of certain federally declared disasters for amounts related to earned income for purposes of determining certain tax credits. 1. Short title This Act may be cited as the Tax Fairness for Disaster Victims Act 2. Lookback rule in case of certain federally declared disasters for amounts related to earned income for purposes of determining certain tax credits (a) In general Section 32 (g) Lookback rule for determining amounts related to earned income in case of certain federally declared disasters (1) In general In the case of a qualified individual who elects the application of this subsection (at such time and in such manner as the Secretary may provide)— (A) 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 credits allowed under this section and section 24(d) shall be determined by substituting— (i) such earned income for the preceding taxable year, for (ii) such earned income for the taxable year which includes the applicable date, and (B) if the social security taxes of the taxpayer for the taxable year which includes the applicable date is less than the social security taxes of the taxpayer for the preceding taxable year, the credit allowed under section 24(d) shall be determined by substituting— (i) such social security taxes for the preceding taxable year, for (ii) such social security taxes for the taxable year which includes the applicable date. (2) Definitions For purposes of this subsection— (A) Qualified individual The term qualified individual (B) Applicable date The term applicable date (C) Federally declared disaster; disaster area The terms federally declared disaster disaster (D) Social security taxes The term social security taxes (3) Application to joint returns For purposes of paragraph (1), in the case of a joint return— (A) such paragraph shall apply if either spouse is a qualified individual, (B) 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, and (C) the social security taxes of the taxpayer for the preceding taxable year shall be the sum of the social security taxes of each spouse for such preceding taxable year. (4) Uniform application of election Any election made under paragraph (1) shall apply for all purposes of paragraph (1). (5) 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) Treatment as mathematical or clerical errors Section 6213(g)(2) of such Code is amended by striking and , and (W) an incorrect use of earned income or social security taxes pursuant to section 32(g). . (c) Effective date The amendments made by this section shall apply to determinations of earned income and social security taxes for taxable years beginning after the date of the enactment of this Act.

Summary: Tax Fairness for Disaster Victims Act This bill allows individual taxpayers living in a disaster area to use earned income from a preceding taxable year for purposes of calculating the earned income tax credit. The bill applies if current year income is disrupted by a disaster and is less than the income of the preceding taxable year.