I
105TH CONGRESS
1ST SESSION
H. R. 1667
To amend the Internal Revenue Code of 1986 to increase the amount of
the dependent care credit and to allow such credit for respite care expenses.
IN THE HOUSE OF REPRESENTATIVES
MAY 20, 1997
Mrs. JOHNSON of Connecticut, introduced the following bill; which was
referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to increase
the amount of the dependent care credit and to allow
such credit for respite care expenses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. INCREASE IN DEPENDENT CARE CREDIT;
CREDIT ALLOWED FOR RESPITE CARE EX-
PENSES.
(a) IN GENERAL.—So much of section 21 of the In-
ternal Revenue Code of 1986 (relating to expenses for
household and dependent care services necessary for gain-
ful employment) as precedes subsection (e) is amended to
read as follows:
‘‘SEC. 21. DEPENDENT CARE SERVICES.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an individual
who maintains a household which includes as a
member 1 or more qualifying individuals, there shall
be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to
the applicable percentage of the sum of—
‘‘(A) the employment-related expenses paid
by such individual during the taxable year, plus
‘‘(B) the respite care expenses paid by
such individual during the taxable year.
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘applicable percentage’
means 50 percent reduced (but not below 20
percent) by 1 percentage point for each full
$1,000 by which the taxpayer’s adjusted gross
income for the taxable year exceeds $15,000.
‘‘(B) COST-OF-LIVING
ADJUSTMENT.—In
the case of any taxable year beginning in a cal-
endar year after 1997, the $15,000 amount
contained in subparagraph (A) shall be in-
creased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins by substituting ‘calendar year 1996’
for ‘calendar year 1992’ in subparagraph
(B) thereof.
If any increase determined under the preceding
sentence is not a multiple of $10, such increase
shall be rounded to the nearest multiple of $10.
‘‘(b) EMPLOYMENT-RELATED EXPENSES.—For pur-
poses of this section—
‘‘(1) 
DETERMINATION
OF
ELIGIBLE
EX-
PENSES.—
‘‘(A) IN
GENERAL.—The term ‘employ-
ment-related expenses’ means amounts paid for
the following expenses, but only if such ex-
penses are incurred to enable the taxpayer to be
gainfully employed for any period for which
there are 1 or more qualifying individuals with
respect to the taxpayer:
‘‘(i) expenses for household services,
and
‘‘(ii) expenses for the care of a quali-
fying individual.
Such term shall not include any amount paid
for services outside the taxpayer’s household at
a camp where the qualifying individual stays
overnight and shall not include any respite care
expense taken into account under subsection
(a).
‘‘(B) 
EXCEPTION.—Employment-related
expenses described in subparagraph (A) which
are incurred for services outside the taxpayer’s
household shall be taken into account only if in-
curred for the care of—
‘‘(i) a qualifying individual described
in subsection (d)(1), or
‘‘(ii) a qualifying individual (not de-
scribed in subsection (d)(1)) who regularly
spends at least 8 hours each day in the
taxpayer’s household.
‘‘(C) DEPENDENT
CARE
CENTERS.—Em-
ployment-related expenses described in subpara-
graph (A) which are incurred for services pro-
vided outside the taxpayer’s household by a de-
pendent care center (as defined in subpara-
graph (D)) shall be taken into account only if—
‘‘(i) such center complies with all ap-
plicable laws and regulations of a State or
unit of local government, and
‘‘(ii) the requirements of subpara-
graph (B) are met.
‘‘(D) DEPENDENT
CARE
CENTER
DE-
FINED.—For purposes of this paragraph, the
term ‘dependent care center’ means any facility
which—
‘‘(i) provides care for more than 6 in-
dividuals (other than individuals who re-
side at the facility), and
‘‘(ii) receives a fee, payment, or grant
for providing services for any of the indi-
viduals (regardless of whether such facility
is operated for profit).
‘‘(2) 
DOLLAR
LIMIT
ON
AMOUNT
CRED-
ITABLE.—
‘‘(A) IN
GENERAL.—The amount of the
employment-related expenses incurred during
any taxable year which may be taken into ac-
count under subsection (a) shall not exceed—
‘‘(i) $2,400 if there is 1 qualifying in-
dividual with respect to the taxpayer for
such taxable year, or
‘‘(ii) $4,800 if there are 2 or more
qualifying individuals with respect to the
taxpayer for such taxable year.
The amount determined under clause (i) or (ii)
(whichever is applicable) shall be reduced by the
aggregate amount excludable from gross income
under section 129 for the taxable year.
‘‘(B) REDUCTION IN LIMIT FOR AMOUNT
OF RESPITE CARE EXPENSES.—The limitation
of subparagraph (A) shall be reduced by the
amount of the respite care expenses taken into
account by the taxpayer under subsection (a)
for the taxable year.
‘‘(3) EARNED INCOME LIMITATION.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the amount of the
employment-related expenses incurred during
any taxable year which may be taken into ac-
count under subsection (a) shall not exceed—
‘‘(i) in the case of an individual who
is not married at the close of such year,
such individual’s earned income for such
year, or
‘‘(ii) in the case of an individual who
is married at the close of such year, the
lesser of such individual’s earned income or
the earned income of his spouse for such
year.
‘‘(B) SPECIAL RULE FOR SPOUSE WHO IS
A
STUDENT
OR
INCAPABLE
OF
CARING
FOR
HIMSELF.—In the case of a spouse who is a
student or a qualified individual described in
subsection (d)(3), for purposes of subparagraph
(A), such spouse shall be deemed for each
month during which such spouse is a full-time
student at an educational institution, or is such
a qualifying individual, to be gainfully employed
and to have earned income of not less than—
‘‘(i) $200 if paragraph (2)(A)(i) ap-
plies for the taxable year, or
‘‘(ii) $400 if paragraph (2)(A)(ii) ap-
plies for the taxable year.
In the case of any husband and wife, this sub-
paragraph shall apply with respect to only one
spouse for any one month.
‘‘(c) RESPITE CARE EXPENSES.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘respite care ex-
penses’ means expenses paid (whether or not to en-
able the taxpayer to be gainfully employed) for—
‘‘(A) the care of a qualifying individual—
‘‘(i) who has attained the age of 13,
or
‘‘(ii) who is under the age of 13 but
has a physical or mental impairment which
results in the individual being incapable of
caring for himself,
during any period when such individual regu-
larly spends at least 8 hours each day in the
taxpayer’s household, or
‘‘(B) care (for not more than 14 days dur-
ing the calendar year) of a qualifying individual
described in subparagraph (A) during any pe-
riod during which the individual does not regu-
larly spend at least 8 hours each day in the tax-
payer’s household.
‘‘(2) DOLLAR LIMIT.—The amount of the res-
pite care expenses incurred during any taxable year
which may be taken into account under subsection
(a) shall not exceed—
‘‘(A) $1,200 if such expenses are incurred
with respect to only 1 qualifying individual for
the taxable year, or
‘‘(B) $2,400 if such expenses are incurred
for 2 or more qualifying individuals for such
taxable year.
‘‘(d) QUALIFYING INDIVIDUAL.—For purposes of this
section, the term ‘qualifying individual’ means—
‘‘(1) a dependent of the taxpayer who is under
the age of 13 and with respect to whom the taxpayer
is entitled to a deduction under section 151(c),
‘‘(2) a dependent of the taxpayer who is phys-
ically or mentally incapable of caring for himself, or
‘‘(3) the spouse of the taxpayer, if he is phys-
ically or mentally incapable of caring for himself.’’
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Paragraph (5) of section 21(e) of such Code
is amended by striking ‘‘subparagraph (A) or (B) of
subsection (b)(1)’’ and inserting ‘‘paragraph (1) or
(2) of subsection (d)’’.
(2) Paragraph (2) of section 129(b) of such
Code is amended by striking ‘‘section 21(d)(2)’’ and
inserting ‘‘section 21(b)(3)(B)’’.
(3) Paragraph (1) of section 129(e) of such
Code is amended by striking ‘‘under section 21(b)(2)
(relating to expenses for household and dependent
care services necessary for gainful employment)’’
and inserting ‘‘or respite care services under section
21 (relating to dependent care services)’’.
(4) Subparagraph (H) of section 6213(g)(2) of
such Code is amended by striking ‘‘section 21 (relat-
ed to expenses for household and dependent care
services necessary for gainful employment)’’ and in-
serting ‘‘section 21 (relating to dependent care serv-
ices)’’.
(5) The item relating to section 21 in the table
of sections for subpart A of part IV of subchapter
A of chapter 1 of such Code is amended to read as
follows:
‘‘Sec. 21. Dependent care services.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
Æ