Foster Care Tax Credit Act

Bill: 113-s-2390
Sponsor: full_name: Sen. Heitkamp, Heidi [D-ND]
Introduced: 2014-05-22
Policy area: Taxation
Subjects: Adoption and foster care

Government information and archives

Income tax credits

Indian social and development programs
Latest action: action_date: 2014-05-22
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2014-05-22
action_desc: Introduced in Senate
text: <p>Foster Care Tax Credit Act - Amends the Internal Revenue Code to allow a partially refundable tax credit for each qualifying foster child who resides in the home of an eligible taxpayer for at least one calendar month during the taxable year. Defines &quot;qualifying foster child&quot; as a child in foster care who has not attained age 17, who is a citizen, national, or resident of the United States, and with respect to whom the child tax credit is not allowable. Requires the name and taxpayer identification number of a foster child to be included on the taxpayer's tax return. </p> <p>Directs the Secretary of Health and Human Services (HHS) to identify provisions in the Internal Revenue Code that can benefit foster families and increase outreach efforts to inform state and Indian tribal foster care agencies and foster families about such provisions. </p>

tv_txt: II 113th CONGRESS 2d Session S. 2390 IN THE SENATE OF THE UNITED STATES May 22, 2014 Ms. Heitkamp (for herself and Mr. Kaine ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to create a tax credit for foster families.

1. Short title This Act may be cited as the Foster Care Tax Credit Act . 2. Foster care tax credit (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: 25E. Foster care tax credit (a) Allowance of credit With respect to each qualifying foster child of an eligible taxpayer, for each calendar month occurring during the taxable year that such child resides in the home of such taxpayer, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 1/12 of the amount determined under subsection (b). (b) Amount determined (1) In general The amount determined under this subsection with respect to an eligible taxpayer and a taxable year is— (A) $1,000, reduced by (B) $50 for each $1,000 (or fraction thereof) by which the eligible taxpayer's modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (2) Threshold amount For purposes of paragraph (1), the term threshold amount has the meaning given such term by section 24(b)(2). (c) Qualifying foster child For purposes of this section, the term qualifying foster child means an eligible foster child (within the meaning of section 152(f)(1)(C)) of the eligible taxpayer— (1) who has not attained age 17, (2) who is a citizen, national, or resident of the United States, (3) who resides in the home of the eligible taxpayer for not less than 1 calendar month during the taxable year, and (4) with respect to whom the credit under section 24 is not allowable to the eligible taxpayer or any other taxpayer who would be an eligible taxpayer but for paragraph (3) of subsection (d). (d) Eligible taxpayer For purposes of this section, the term eligible taxpayer means any taxpayer, except that— (1) no single household shall include more than 1 eligible taxpayer, (2) married individuals filing a joint return shall be treated as 1 eligible taxpayer, and (3) in the case of individuals not described in paragraph (2) who are members of the same household, only the taxpayer with the highest adjusted gross income for the taxable year shall be treated as an eligible taxpayer. (e) Calendar month For purposes of this section, if a foster child resides in the home of the taxpayer for more than 15 consecutive days of a calendar month but fewer than the total number of days in such calendar month, such foster child shall be treated as residing in the home of the taxpayer for the full calendar month. (f) Portion of credit refundable (1) In general The aggregate credits allowed to a taxpayer 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 and the limitation under section 26(a) (determined after any reduction of the credit under section 24(a) by reason of section 24(d)), or (B) the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection, and after any reduction of the credit under section 24(a) by reason of section 24(d)) would increase if the limitation imposed by section 26(a) were increased by the greater of— (i) 15 percent of so much of the taxpayer's earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $10,000, or (ii) in the case of a taxpayer with 3 or more qualifying foster children residing in the home of the taxpayer for all months in the taxable year (without regard to whether the same 3 children reside in the home of the taxpayer for all such months), the excess (if any) of— (I) the taxpayer's social security taxes for the taxable year, over (II) the credit allowed under section 32 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) without regard to section 26(a). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year. (2) Social security taxes For purposes of paragraph (1), the term social security taxes has the same meaning as when used in section 24(d)(1). (3) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2001, the $10,000 amount contained in paragraph (1)(B)(i) shall be adjusted in the same manner as the $10,000 amount under section 24(d)(1)(B) is adjusted under section 24(d)(3). (g) Identification requirement No credit shall be allowed under this section to an eligible taxpayer with respect to any qualifying foster child unless the taxpayer includes the name and taxpayer identification number of such qualifying foster child 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 the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item: Sec. 25E. Foster care tax credit. . (c) Effective date The amendments made by this section shall apply to calendar months beginning after December 31, 2013, in taxable years beginning after such date. (d) Education The Secretary of Health and Human Services (or the Secretary's delegate), in coordination with the Secretary of the Treasury or such Secretary's delegate, shall identify provisions in the Internal Revenue Code of 1986 that can be used by or can benefit foster families, and shall increase outreach efforts to provide information and educational materials regarding such provisions to State and Indian tribal foster care agencies and to foster families.