Credit for Caring Act of 2021
Bill: S.1670 | Sponsor: Sen. Ernst, Joni (R-IA)
Policy area: Taxation

Summary:
Credit for Caring Act of 2021
This bill allows an eligible caregiver a tax credit of up to $5,000 for 30% of the cost of long-term care expenses that exceed $2,000 in a taxable year. The bill defines eligible caregiver as an individual who has earned income for the taxable year in excess of $7,500 and pays or incurs expenses for providing care to a spouse or other dependent relative with long-term care needs.

To amend the Internal Revenue Code of 1986 to provide a nonrefundable 
                 credit for working family caregivers.

    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 ``Credit for Caring Act of 2021''.

SEC. 2. CREDIT FOR WORKING FAMILY CAREGIVERS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 25D the following new section:

``SEC. 25E. WORKING FAMILY CAREGIVERS.

    ``(a) Allowance of Credit.--In the case of an eligible caregiver, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to 30 percent of the 
qualified expenses paid by the taxpayer during the taxable year to the 
extent that such expenses exceed $2,000.
    ``(b) Limitation.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) for the taxable year shall not exceed $5,000.
            ``(2) Adjustment for inflation.--In the case of any taxable 
        year beginning after 2021, the dollar amount contained in 
        paragraph (1) shall be increased by an amount equal to the 
        product of--
                    ``(A) such dollar amount, and
                    ``(B) the medical care cost adjustment determined 
                under section 213(d)(10)(B)(ii) for the calendar year 
                in which the taxable year begins, determined by 
                substituting `2020' for `1996' in subclause (II) 
                thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $50, such increase shall be rounded to the next 
        lowest multiple of $50.
    ``(c) Eligible Caregiver.--For purposes of this section, the term 
`eligible caregiver' means an individual who--
            ``(1) during the taxable year pays or incurs qualified 
        expenses in connection with providing care for a qualified care 
        recipient, and
            ``(2) has earned income (as defined in section 32(c)(2)) 
        for the taxable year in excess of $7,500.
    ``(d) Qualified Care Recipient.--For purposes of this section--
            ``(1) In general.--The term `qualified care recipient' 
        means, with respect to any taxable year, any individual who--
                    ``(A) is the spouse of the eligible caregiver, or 
                any other person who bears a relationship to the 
                eligible caregiver described in any of subparagraphs 
                (A) through (H) of section 152(d)(2), and
                    ``(B) has been certified, before the due date for 
                filing the return of tax for the taxable year, by a 
                licensed health care practitioner (as defined in 
                section 7702B(c)(4)) as being an individual with long-
                term care needs described in paragraph (3) for a 
                period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
            ``(2) Period for making certification.--Notwithstanding 
        paragraph (1)(B), a certification shall not be treated as valid 
        unless it is made within the 39\1/2\-month period ending on 
        such due date (or such other period as the Secretary 
        prescribes).
            ``(3) Individuals with long-term care needs.--An individual 
        is described in this paragraph if the individual meets any of 
        the following requirements:
                    ``(A) The individual is at least 6 years of age 
                and--
                            ``(i) is unable to perform (without 
                        substantial assistance from another individual) 
                        at least 2 activities of daily living (as 
                        defined in section 7702B(c)(2)(B)) due to a 
                        loss of functional capacity, or
                            ``(ii) requires substantial supervision to 
                        protect such individual from threats to health 
                        and safety due to severe cognitive impairment 
                        and is unable to perform, without reminding or 
                        cuing assistance, at least 1 activity of daily 
                        living (as so defined) or to the extent 
                        provided in regulations prescribed by the 
                        Secretary (in consultation with the Secretary 
                        of Health and Human Services), is unable to 
                        engage in age appropriate activities.
                    ``(B) The individual is at least 2 but not 6 years 
                of age and is unable due to a loss of functional 
                capacity to perform (without substantial assistance 
                from another individual) at least 2 of the following 
                activities: eating, transferring, or mobility.
                    ``(C) The individual is under 2 years of age and 
                requires specific durable medical equipment by reason 
                of a severe health condition or requires a skilled 
                practitioner trained to address the individual's 
                condition to be available if the individual's parents 
                or guardians are absent.
    ``(e) Qualified Expenses.--For purposes of this section--
            ``(1) In general.--Subject to paragraph (4), the term 
        `qualified expenses' means expenditures for goods, services, 
        and supports that--
                    ``(A) assist a qualified care recipient with 
                accomplishing activities of daily living (as defined in 
                section 7702B(c)(2)(B)) and instrumental activities of 
                daily living (as defined in section 1915(k)(6)(F) of 
                the Social Security Act (42 U.S.C. 1396n(k)(6)(F))), 
                and
                    ``(B) are provided solely for use by such qualified 
                care recipient.
            ``(2) Adjustment for other tax benefits.--The amount of 
        qualified expenses otherwise taken into account under paragraph 
        (1) with respect to an individual shall be reduced by the sum 
        of any amounts paid for the benefit of such individual for the 
        taxable year which are--
                    ``(A) taken into account under section 21 or 213, 
                or
                    ``(B) excluded from gross income under section 129, 
                223(f), or 529A(c)(1)(B).
            ``(3) Goods, services, and supports.--For purposes of 
        paragraph (1), goods, services, and supports (as defined by the 
        Secretary) shall include--
                    ``(A) human assistance, supervision, cuing and 
                standby assistance,
                    ``(B) assistive technologies and devices (including 
                remote health monitoring),
                    ``(C) environmental modifications (including home 
                modifications),
                    ``(D) health maintenance tasks (such as medication 
                management),
                    ``(E) information,
                    ``(F) transportation of the qualified care 
                recipient,
                    ``(G) nonhealth items (such as incontinence 
                supplies), and
                    ``(H) coordination of and services for people who 
                live in their own home, a residential setting, or a 
                nursing facility, as well as the cost of care in these 
                or other locations.
            ``(4) Qualified expenses for eligible caregivers.--For 
        purposes of paragraph (1), the following shall be treated as 
        qualified expenses if paid or incurred by an eligible 
        caregiver:
                    ``(A) Expenditures for respite care for a qualified 
                care recipient.
                    ``(B) Expenditures for counseling, support groups, 
                or training relating to caring for a qualified care 
                recipient.
                    ``(C) Lost wages for unpaid time off due to caring 
                for a qualified care recipient as verified by an 
                employer.
                    ``(D) Travel costs of the eligible caregiver 
                related to caring for a qualified care recipient.
                    ``(E) Expenditures for technologies, as determined 
                by the Secretary, that assist an eligible caregiver in 
                providing care for a qualified care recipient.
            ``(5) Human assistance.--The term `human assistance' 
        includes the costs of a direct care worker.
            ``(6) Documentation.--An expense shall not be taken into 
        account under this section unless the eligible caregiver 
        substantiates such expense under such regulations or guidance 
        as the Secretary shall provide.
            ``(7) Mileage rate.--For purposes of this section, the 
        mileage rate for the use of a passenger automobile shall be the 
        standard mileage rate used to calculate the deductible costs of 
        operating an automobile for medical purposes. Such rate may be 
        used in lieu of actual automobile-related travel expenses.
            ``(8) Coordination with able accounts.--Qualified expenses 
        for a taxable year shall not include contributions to an ABLE 
        account (as defined in section 529A).
    ``(f) Phase Out Based on Adjusted Gross Income.--For purposes of 
this section--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) shall be reduced (but not below zero) by $100 
        for each $1,000 (or fraction thereof) by which the taxpayer's 
        modified adjusted gross income exceeds the threshold amount.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income increased by 
        any amount excluded from gross income under section 911, 931, 
        or 933.
            ``(3) Threshold amount.--The term `threshold amount' 
        means--
                    ``(A) $150,000 in the case of a joint return, and
                    ``(B) $75,000 in any other case.
            ``(4) Indexing.--In the case of any taxable year beginning 
        in a calendar year after 2021, each dollar amount contained in 
        paragraph (3) shall be increased by an amount equal to the 
        product of--
                    ``(A) such dollar amount, and
                    ``(B) the cost-of-living adjustment determined 
                under section (1)(f)(3) for the calendar year in which 
                the taxable year begins, by substituting `calendar year 
                2020' for `calendar year 2016' in subparagraph (A)(ii) 
                thereof.
            ``(5) Rounding rule.--If any increase determined under 
        paragraph (4) is not a multiple of $50, such increase shall be 
        rounded to the next lowest multiple of $50.
    ``(g) Identification of Eligible Caregiver With Care Recipient 
(Qualified Care Recipient) Identification Requirement.--No credit shall 
be allowed under this section to a taxpayer with respect to any 
qualified care recipient unless the taxpayer includes the name and 
taxpayer identification number of such individual, and the 
identification number of the licensed health care practitioner 
certifying such individual, on the return of tax for the taxable 
year.''.
    (b) Clerical Amendment.--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. Working family caregivers.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.
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