Young Child Tax Credit Act

SECTION 1. SHORT TITLE; FINDING.

    (a) Short Title.--This Act may be cited as the ``Young Child Tax 
Credit Act''.
    (b) Findings.--Congress finds the following:
            (1) Economists have found similar effects of the importance 
        of income in the earliest years with returns to school 
        achievement.
            (2) Pediatricians and other child development experts have 
        long talked about the critical importance of the earliest years 
        of life.
            (3) Young children, including babies and toddlers, are the 
        poorest people in the country by age.
            (4) With the recent improvements signed into law in 
        December, together, the Child Tax Credit and Earned Income Tax 
        Credit now lift more children out of poverty than any other 
        Federal policies.
            (5) Families with young children receive the smallest child 
        tax credits, despite the fact that the economic literature 
        suggests that these credits have particularly beneficial 
        effects for families with young children.
            (6) Economists have found that large fluctuations in a 
        family's income can be detrimental to the development of young 
        children. Research on scarcity have found it is hard for 
        parents to focus on children if they are worrying about having 
        sufficient income to meet their family's needs.

SEC. 2. YOUNG CHILD TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. YOUNG CHILD TAX CREDIT.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the product of--
            ``(1) the applicable dollar amount, multiplied by
            ``(2) the number of qualifying children of the taxpayer for 
        which the taxpayer is allowed a deduction under section 151 and 
        who (as of the close of such taxable year) have not attained 
        age 3.
    ``(b) Applicable Dollar Amount.--For purposes of this section, the 
term `applicable dollar amount' means with respect to any taxable year, 
the product of--
            ``(1) 1.5, multiplied by
            ``(2) the dollar amount in effect under section 24(a) for 
        the taxable year.
    ``(c) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) shall be reduced (but not below zero) by the 
        phaseout amount for each $1,000 (or fraction thereof) by which 
        the taxpayer's modified adjusted gross income (as defined in 
        section 24(b)(1)) exceeds the threshold amount (as defined in 
        section 24(b)(2)).
            ``(2) Phaseout amount.--For purposes of this subsection, 
        the term `phaseout amount' means 1.5 multiplied by the first 
        dollar amount in section 24(b)(1).
    ``(d) Qualifying Child.--For purposes of this section, the term 
`qualifying child' has the meaning given such term by section 24(c).
    ``(e) Identification Requirement.--No credit shall be allowed under 
this section to a taxpayer with respect to any qualifying child unless 
the taxpayer includes the name and taxpayer identification number of 
such qualifying child on the return of tax for the taxable year.
    ``(f) Reconciliation of Credit and Advance Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        this section for any taxable year shall be reduced (but not 
        below zero) by the aggregate amount of any advance payments of 
        such credit under section 7527A for such taxable year.
            ``(2) Excess advance payments.--If the aggregate amount of 
        advance payments under section 7527A for the taxable year 
        exceed the amount of the credit allowed under this section for 
        such taxable year (determined without regard to paragraph (1)), 
        the tax imposed by this chapter for such taxable year shall be 
        increased by the amount of such excess.''.
    (b) Advance Payment of Credit.--Chapter 77 of such Code is amended 
by inserting after section 7527 the following new section:

``SEC. 7527A. ADVANCE PAYMENT OF YOUNG CHILD TAX CREDIT.

    ``(a) In General.--As soon as practicable and not later than 1 year 
after the date of the enactment of this Act, the Secretary shall 
establish a program for making advance payments of the credit allowed 
under section 36C on a monthly basis, or as frequently as the Secretary 
determines to be administratively feasible, to taxpayers allowed such 
credit (determined without regard to section 36C(f)(1)).
    ``(b) Limitation.--The Secretary may make payments under subsection 
(a) only to the extent that the total amount of such payments made to 
any taxpayer during the taxable year does not exceed the amount 
determined under subsection (a) of section 36C with respect to such 
taxpayer (determined without regard to subsections (c) and (f) of such 
section). Such program shall make reasonable efforts to apply the 
limitation of section 36C(c) with respect to payments made under such 
program.''.
    (c) Conforming Amendments.--
            (1) Section 152(f)(6)(B) of such Code is amended by 
        striking ``and'' at the end of clause (iii), by striking the 
        period at the end of clause (iv) and inserting ``, and'', and 
        by adding at the end the following new clause:
                            ``(v) the credit under section 36C 
                        (relating to young child tax credit).''.
            (2) Section 6211(b)(4)(A) of such Code is amended by 
        inserting ``36C,'' after ``36B,''.
            (3) Section 6213(g)(2) of such Code is amended by striking 
        ``and'' at the end of subparagraph (P), by striking the period 
        at the end of subparagraph (Q) and inserting ``, and'', and by 
        inserting after subparagraph (Q) the following new 
        subparagraph:
                    ``(R) an omission of a correct TIN required under 
                section 36C(e) (relating to young child tax credit) to 
                be included on a return.''.
            (4) Section 6402(m) of such Code is amended by striking 
        ``or 32'' and inserting ``, 32 or 36C''.
            (5) Section 6695(g) of such Code is amended by striking 
        ``or 32'' and inserting ``32, or 36C''.
            (6) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36C,'' after ``36B,''.
            (7) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36B 
        the following new item:

``Sec. 36C. Young child tax credit.''.
            (8) The table of sections for chapter 77 of such Code is 
        amended by inserting after the item relating to section 7527 
        the following new item:

``Sec. 7527A. Advance payment of young child tax credit.''.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2016.
            (2) Advance payment program.--The Secretary of the 
        Treasury, or his designee, shall establish the program 
        described in section 7527A of the Internal Revenue Code of 1986 
        (as added by this section) not later than such date.

Summary: Young Child Tax Credit Act This bill amends the Internal Revenue Code to allow individual taxpayers a new refundable tax credit based on the number of their qualifying children under the age of three and the taxpayer's adjusted gross income. Advance payments of credit amounts shall be made to taxpayers each month.