To amend the Internal Revenue Code of 1986 to allow individuals either a credit against income tax or a deduction for expenses paid or incurred by reason of a voluntary or mandatory evacuation.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Evacuees Tax Relief Act of 2005''.

SEC. 2. EVACUATION EXPENSES.

    (a) Credit for Evacuation Expenses.--Subpart A of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code of 1986 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25D the following new section:

``SEC. 25E. EVACUATION EXPENSES.

    ``(a) Allowance of Credit.--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 qualified evacuation 
expenses paid or incurred by the individual during the taxable year.
    ``(b) Dollar Limitation.--With respect to an individual, the 
aggregate amount of qualified evacuation expenses which may be taken 
into account under subsection (a) for all taxable years during the 
credit allowance period shall not exceed $5,000.
    ``(c) Qualified Evacuation Expenses.--For purposes of this 
section--
            ``(1) In general.--The term `qualified evacuation expenses' 
        means, with respect to any taxable year during the credit 
        allowance period, the sum of all expenses paid or incurred by 
        the individual during such taxable year by reason of a 
        qualified evacuation. Such expenses shall include travel and 
        lodging expenses as do not exceed $1,000, lost wages, and any 
        property damage not compensated for by insurance or otherwise.
            ``(2) Qualified evacuation.--With respect to an individual, 
        the term `qualified evacuation' means a voluntary or mandatory 
        evacuation ordered by reason of a qualified disaster (as 
        defined in section 139(c)) of an area in which such individual 
        resides on the date of such disaster.
            ``(3) Credit allowance period.--With respect to a qualified 
        evacuation, the term `credit allowance period' means the 
        taxable year or years during which the evacuation occurred and 
        each of the 3 succeeding taxable years.
    ``(d) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to an 
        individual under subpart C shall be increased by the lesser 
        of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection, or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would increase if the 
                limitation imposed by section 26(a) were increased by 
                the individual's social security taxes for the taxable 
                year.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of credit otherwise allowable under 
        subsection (a).
            ``(2) Social security taxes.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The term `social security taxes' 
                means, with respect to any taxpayer for any taxable 
                year--
                            ``(i) the amount of the taxes imposed by 
                        section 3101 and 3201(a) on amounts received by 
                        the taxpayer during the calendar year in which 
                        the taxable year begins,
                            ``(ii) 50 percent of the taxes imposed by 
                        section 1401 on the self-employment income of 
                        the taxpayer for the taxable year, and
                            ``(iii) 50 percent of the taxes imposed by 
                        section 3211(a)(1) on amounts received by the 
                        taxpayer during the calendar year in which the 
                        taxable year begins.
                    ``(B) Coordination with special refund of social 
                security taxes.--The term `social security taxes' shall 
                not include any taxes to the extent the taxpayer is 
                entitled to a special refund of such taxes under 
                section 6413(c).
                    ``(C) Special rule.--Any amounts paid pursuant to 
                an agreement under section 3121(l) (relating to 
                agreements entered into by American employers with 
                respect to foreign affiliates) which are equivalent to 
                the taxes referred to in subparagraph (A)(i) shall be 
                treated as taxes referred to in such paragraph.
    ``(e) Denial of Double Benefit.--No credit shall be allowed under 
subsection (a) for any expense for which a deduction or credit is 
allowed under any other provision of this chapter.
    ``(f) Election not to Have Section Apply.--An individual may elect 
not to have this section apply with respect to the qualified evacuation 
expenses of the individual for any taxable year.''.
    (b) Deduction for Evacuation Expenses.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to additional 
        itemized deductions for individuals) is amended by 
        redesignating section 224 as section 225 and by inserting after 
        section 223 the following new section:

``SEC. 224. DEDUCTION FOR EVACUATION EXPENSES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction an amount equal to the qualified 
evacuation expenses paid or incurred by the individual during the 
taxable year.
    ``(b) Dollar Limitation.--With respect to an individual, the 
aggregate amount of qualified evacuation expenses which may be taken 
into account under subsection (a) for all taxable years during the 
deduction allowance period shall not exceed $5,000.
    ``(c) Qualified Evacuation Expenses.--For purposes of this 
section--
            ``(1) In general.--The term `qualified evacuation expenses' 
        means, with respect to any taxable year during the deduction 
        allowance period, the sum of all expenses paid or incurred by 
        the individual during such taxable year by reason of a 
        qualified evacuation. Such expenses shall include travel and 
        lodging expenses as do not exceed $1,000, lost wages, and any 
        property damage not compensated for by insurance or otherwise.
            ``(2) Qualified evacuation.--With respect to an individual, 
        the term `qualified evacuation' means a voluntary or mandatory 
        evacuation ordered by reason of a qualified disaster (as 
        defined in section 139(c)) of an area in which such individual 
        resides on the date of such disaster.
            ``(3) Deduction allowance period.--With respect to a 
        qualified evacuation, the term `deduction allowance period' 
        means the taxable year or years during which the evacuation 
        occurred and each of the 3 succeeding taxable years.
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under subsection (a) for any expense for which a deduction or credit is 
allowed under any other provision of this chapter.
    ``(e) Election not to Have Section Apply.--An individual may elect 
not to have this section apply with respect to the qualified evacuation 
expenses of the individual for any taxable year.''.
            (2) Deduction allowed whether or not individual itemizes 
        other deductions.--Subsection (a) of section 62 of such Code is 
        amended by redesignating paragraph (19) (relating to health 
        savings accounts) as paragraph (20) and inserting at the end 
        the following new paragraph:
            ``(21) Deduction for evacuation expenses.--The deduction 
        allowed by section 224.''.
    (c) Clerical Amendments.--
            (1) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 25D the following new item:

``Sec. 25E. Evacuation expenses.''.
            (2) The table of sections for part VII of subchapter B of 
        chapter 1 of such Code is amended by striking the last item and 
        inserting the following new items:

``Sec. 224. Deduction for evacuation expenses.
``Sec. 225. Cross reference.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after August 27, 2005.

Summary: Evacuees Tax Relief Act of 2005 - Amends the Internal Revenue Code to allow individual taxpayers to elect either a tax credit or tax deduction for up to $5,000 of their voluntary or mandatory evacuation expenses due to a disaster.