Parent Tax Credit Act
Bill: S.1426 | Sponsor: Sen. Hawley, Josh (R-MO)
Policy area: Taxation

Summary:
Parent Tax Credit Act
This bill allows an eligible individual a tax credit of $6,000 ($12,000 in the case of a joint tax return), with a limitation based on a minimum earned income level. The bill defines eligible individual as any individual who has a qualifying child who is not yet 13. The eligible individual may not be a nonresident alien, any alien unlawfully present in the United States, and any individual who is a dependent of another taxpayer. To be eligible for the credit, the taxpayer must include on the return of tax a valid Social Security account number.
The bill requires the Internal Revenue Service to establish a program for making advance payments of the credit to taxpayers on a monthly basis.
The bill terminates the child and dependent care tax credit after 2021.

To amend the Internal Revenue Code of 1986 to establish a refundable 
                        tax credit for parents.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Parent Tax Credit Act''.

SEC. 2. ESTABLISHMENT OF PARENT 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. PARENT TAX CREDIT.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to $6,000 ($12,000 in the case of 
a joint return).
    ``(b) Limitation Based on Earned Income.--
            ``(1) In general.--No credit shall be allowed under this 
        section to any taxpayer for any taxable year in which the 
        earned income (as defined in section 32(c)(2)) of such taxpayer 
        during such taxable year is not equal to or greater than the 
        minimum income level.
            ``(2) Minimum income level.--For purposes of this 
        subsection, the minimum income level shall be an amount equal 
        to the product of--
                    ``(A) the minimum wage rate in effect under section 
                6(a)(1) of the Fair Labor Standards Act of 1938 (29 
                U.S.C. 206(a)(1)), multiplied by
                    ``(B) 1040 hours.
    ``(c) Eligible Individual.--The term `eligible individual' means 
any individual--
            ``(1) who, for the taxable year, has a qualifying child (as 
        defined in section 152(c)) who has not attained age 13 as of 
        the close of such taxable year, and
            ``(2) other than--
                    ``(A) any nonresident alien individual,
                    ``(B) any alien (as defined in section 101(a) of 
                the Immigration and Nationality Act (8 U.S.C. 1101(a)) 
                who is unlawfully present in the United States (within 
                the meaning of that Act), and
                    ``(C) any individual with respect to whom a 
                deduction under section 151 is allowable to another 
                taxpayer for a taxable year beginning in the calendar 
                year in which the individual's taxable year begins.
    ``(d) Identification Number Requirement.--
            ``(1) In general.--No credit shall be allowed under 
        subsection (a) to an eligible individual who does not include 
        on the return of tax for the taxable year--
                    ``(A) such individual's valid identification 
                number,
                    ``(B) in the case of a joint return, the valid 
                identification number of such individual's spouse, and
                    ``(C) in the case of a qualifying child described 
                in subsection (c)(1), the valid identification number 
                of such qualifying child.
            ``(2) Valid identification number.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `valid identification number' means a social 
                security number (as such term is defined in section 
                24(h)(7)).
                    ``(B) Adoption taxpayer identification number.--For 
                purposes of paragraph (1)(C), in the case of a 
                qualifying child who is adopted or placed for adoption, 
                the term `valid identification number' shall include 
                the adoption taxpayer identification number of such 
                child.
            ``(3) Special rule for members of the armed forces.--
        Paragraph (1)(B) shall not apply in the case where at least 1 
        spouse was a member of the Armed Forces of the United States at 
        any time during the taxable year and at least 1 spouse 
        satisfies paragraph (1)(A).
            ``(4) Mathematical or clerical error authority.--Any 
        omission of a correct valid identification number required 
        under this subsection shall be treated as a mathematical or 
        clerical error for purposes of applying section 6213(g)(2) to 
        such omission.
    ``(e) Taxable Year Must Be Full Taxable Year.--Except in the case 
of a taxable year closed by reason of the death of the taxpayer, no 
credit shall be allowable under this section in the case of a taxable 
year covering a period of less than 12 months.
    ``(f) Restrictions on Taxpayer Who Improperly Claimed Credit in 
Prior Year.--Rules similar to the rules under section 24(g) shall apply 
for purposes of this section.
    ``(g) Adjustment for Inflation.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2022, each dollar amount in subsection (a) 
        shall 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 
                `2021'for `2016' in subparagraph (A)(ii) thereof.
            ``(2) Rounding.--If any increase under paragraph (1) is not 
        a multiple of $100, such increase shall be rounded to the next 
        lowest multiple of $100.''.
    (b) Advance Payment of Credit.--
            (1) In general.--Chapter 77 of the Internal Revenue Code of 
        1986, as amended by section 9611(b) of the American Rescue Plan 
        Act of 2021 (Public Law 117-2), is amended by inserting after 
        section 7527A the following new section:

``SEC. 7527B. ADVANCE PAYMENT OF PARENT TAX CREDIT.

    ``(a) In General.--As soon as practicable after the date of the 
enactment of this section, the Secretary shall establish a program for 
making advance payments of the credit allowed under section 36C 
(determined without regard to subsection (h) of such section), on a 
monthly basis, to taxpayers (with the exception of any taxpayer who 
elects not to receive such payments pursuant to subsection (c)(1)).
    ``(b) Limitation.--With respect to any taxable year, the Secretary 
may make payments under subsection (a) only to the extent that--
            ``(1) the total amount of such payments made to any 
        taxpayer during such taxable year does not exceed the amount 
        estimated by the Secretary as would be allowable under section 
        36C for such taxable year, as estimated based on--
                    ``(A) any information provided by the taxpayer 
                under subsection (c)(2), or
                    ``(B) if no information described in subparagraph 
                (A) has been provided, any information with respect to 
                such taxpayer for the most recent taxable year for 
                which a return has been filed by the taxpayer, and
            ``(2) for each monthly payment, such payment does not 
        exceed an amount equal to the quotient of--
                    ``(A) the amount of the credit estimated under 
                paragraph (1) for such taxable year, divided by
                    ``(B) 12.
    ``(c) On-Line Information Portal.--The Secretary shall establish an 
on-line portal which allows taxpayers to--
            ``(1) elect not to receive payments under this section, and
            ``(2) provide information to the Secretary which would be 
        relevant to the determination under subsection (b)(1), 
        including information regarding--
                    ``(A) for purposes of section 36C(c)(1), whether 
                the taxpayer has any qualifying children, including by 
                reason of the birth of a child,
                    ``(B) a change in the taxpayer's marital status,
                    ``(C) a significant change in the taxpayer's earned 
                income, and
                    ``(D) any other factor which the Secretary may 
                provide.
    ``(d) Notice of Payments.--Not later than January 31 of the 
calendar year following any calendar year during which the Secretary 
makes one or more payments to any taxpayer under this section, the 
Secretary shall provide such taxpayer with a written notice which 
includes the taxpayer's taxpayer identity (as defined in section 
6103(b)(6)), the aggregate amount of such payments made to such 
taxpayer during such calendar year, and such other information as the 
Secretary determines appropriate.
    ``(e) Administrative Provisions.--
            ``(1) Application of electronic funds payment 
        requirement.--The payments made by the Secretary under 
        subsection (a) shall be made by electronic funds transfer to 
        the same extent and in the same manner as if such payments were 
        Federal payments not made under this title.
            ``(2) Application of certain rules.--Rules similar to the 
        rules of subparagraphs (B) and (C) of section 6428A(f)(3) shall 
        apply for purposes of this section.''.
            (2) Reconciliation of credit and advance credit.--Section 
        36C of such Code, as added by subsection (a), is amended by 
        adding at the end the following:
    ``(h) 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 7527B for such taxable year.
            ``(2) Failure to satisfy earned income requirement.--In the 
        case of any taxpayer who received any advance payment under 
        section 7527B for the taxable year and whose earned income for 
        such taxable year was not equal to or greater than the minimum 
        income level (as determined under subsection (b)(2)), for the 
        period of 2 taxable years subsequent to such taxable year--
                    ``(A) no advance payment may be provided under 
                section 7527B to such taxpayer in either taxable year 
                during such period, and
                    ``(B) the amount of the credit which would (but for 
                this paragraph) otherwise be allowable to such taxpayer 
                under subsection (a) in either taxable year during such 
                period shall be reduced by one-half of such amount.''.
    (c) Exception From Reduction or Offset.--Any credit allowed to any 
individual under section 36C of the Internal Revenue Code of 1986 (as 
added by subsection (a)) or any advance payment of such credit under 
section 7527B of such Code (as added under subsection (b)) shall not 
be--
            (1) subject to reduction or offset pursuant to section 3716 
        or 3720A of title 31, United States Code,
            (2) subject to reduction or offset pursuant to subsection 
        (d), (e), or (f) of section 6402 of the Internal Revenue Code 
        of 1986, or
            (3) reduced or offset by other assessed Federal taxes that 
        would otherwise be subject to levy or collection.
    (d) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) of the Internal Revenue Code of 
        1986 is amended--
                    (A) by inserting ``36C,'' after ``36B,'', and
                    (B) by striking ``and 7527A'' and inserting 
                ``7527A, and 7527B''.
            (2) Section 6213(g)(2)(L) of such Code is amended by 
        inserting ``36C,'' after ``32,''.
            (3) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended--
                    (A) by inserting ``36C,'' after ``36B,'', and
                    (B) by striking ``or 7527A'' and inserting ``7527A, 
                or 7527B''.
            (4) 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. Parent Tax Credit.''.
            (5) The table of sections for chapter 77 of such Code is 
        amended by inserting after the item relating to section 7527A 
        the following new item:

``Sec. 7527B. Advance payment of Parent Tax Credit.''.
    (e) Termination of Child and Dependent Care Credit.--Section 21 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following:
    ``(i) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2021.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.
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