Earned Income Tax Credit Improvement and Simplification Act 2015

Bill: 114-hr-902
Sponsor: full_name: Rep. Neal, Richard E. [D-MA-1]
Introduced: 2015-02-11
Policy area: Taxation
Subjects: Income tax credits

Inflation and prices

Marriage and family status

Poverty and welfare assistance

Separation, divorce, custody, support

Tax treatment of families

Wages and earnings
Latest action: action_date: 2015-02-11
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2015-02-11
action_desc: Introduced in House
text: <p><strong>Earned Income Tax Credit Improvement and Simplification Act 2015</strong></p> <p> Amends the Internal Revenue Code, with respect to the earned income tax credit, to: (1) make permanent the increase in the rate of such credit for taxpayers with three or more qualifying children and the reduction in the amount of the marriage penalty for such credit; (2) allow such credit for an individual with no qualifying children who has attained the age of 21 but not 25 and is not a full-time student, and whose qualifying children do not have valid social security numbers; (3) revise eligibility rules relating to married individuals living apart and qualifying children claimed by another family member; and (4) repeal the denial of such credit for taxpayers with excess investment income. </p>

tv_txt: I 114th CONGRESS 1st Session H. R. 902 IN THE HOUSE OF REPRESENTATIVES February 11, 2015 Mr. Neal (for himself, Ms. Pelosi , Ms. Clark of Massachusetts , Ms. DeLauro , Mr. Doggett , Ms. Norton , Mr. Takano , Mr. McDermott , Ms. Brownley of California , Mr. Cummings , Ms. Moore , Mr. Pascrell , Mrs. Davis of California , Mr. Rangel , Mr. Langevin , Mr. Thompson of California , Mr. Kilmer , Mr. Lynch , Mr. Larson of Connecticut , Mr. Blumenauer , Mr. Ryan of Ohio , Mr. Levin , Ms. Linda T. Sánchez of California , Mr. Van Hollen , Mr. McGovern , Ms. Schakowsky , Mr. Becerra , Mr. Welch , Mr. Kennedy , Ms. Slaughter , Ms. Eshoo , Mr. Kind , Ms. Pingree , Mr. Crowley , Mr. Danny K. Davis of Illinois , Ms. Bonamici , Mr. Ben Ray Luján of New Mexico , Ms. Maxine Waters of California , Mr. Rush , Mr. Keating , Mr. Cicilline , Mr. Cohen , Ms. Esty , Ms. McCollum , Mr. Lewis , Mr. Kildee , and Ms. Fudge ) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to make improvements in the earned income tax credit.

1. Short title; table of contents (a) Short title This Act may be cited as the Earned Income Tax Credit Improvement and Simplification Act 2015 . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Certain improvements in the earned income tax credit made permanent. Sec. 3. Strengthening the earned income tax credit for individuals with no qualifying children. Sec. 4. Taxpayer eligible for credit for individuals with no qualifying children if qualifying children do not have valid Social Security numbers. Sec. 5. Credit allowed in case of certain separated spouses. Sec. 6. Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family. Sec. 7. Elimination of disqualified investment income test. 2. Certain improvements in the earned income tax credit made permanent (a) Increase in credit percentage for three or more qualifying children made permanent Section 32(b)(1) of the Internal Revenue Code of 1986 is amended to read as follows: (1) Percentages The credit percentage and the phaseout percentage shall be determined in accordance with the following table: In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 1 qualifying child 34 15.98 2 qualifying children 40 21.06 3 or more qualifying children 45 21.06 No qualifying children 7.65 7.65 . (b) Reduction of marriage penalty made permanent (1) In general Section 32(b)(2)(B) of such Code is amended to read as follows: (B) Joint returns (i) In general In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000. (ii) Inflation adjustment In the case of any taxable year beginning after 2014, the $5,000 amount in clause (i) shall be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost of living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2009 for calendar year 1992 in subparagraph (B) thereof. (iii) Rounding Subparagraph (A) of subsection (j)(2) shall apply after taking into account any increase under clause (ii). . (c) Conforming amendment Section 32(b) of such Code is amended by striking paragraph (3). (d) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 3. Strengthening the earned income tax credit for individuals with no qualifying children (a) Credit for certain individuals over age 21 (1) In general Section 32(c)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (G) Special rule for working individuals over age 20 and without qualifying child (i) In general In the case of an individual (or, if the individual is married, either the individual or the individual’s spouse) who— (I) has attained the age of 21 but not attained age 25 before the close of the taxable year, and (II) is not a full-time student at any time during the taxable year, paragraph (1)(A)(ii)(II) shall not apply for purposes of determining whether such individual is an eligible individual. (ii) Student For purposes of this subparagraph, an individual shall be considered a full-time student if such individual is carrying more than 1/2 the normal full-time work load for the course of study the individual is pursuing. . (2) Information return matching Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall develop and implement procedures for checking an individual’s claim for a credit under section 32 of the Internal Revenue Code of 1986, by reason of subsection (c)(1)(G) thereof, against any information return made with respect to such individual under section 6050S (relating to returns relating to higher education tuition and related expenses). (b) Increased credit (1) Credit percentage and phaseout percentage The table contained in section 32(b)(1)(A) of such Code, as amended by this Act, is amended by striking 7.65 each place it appears and inserting 15.3 . (2) Earned income amount and phaseout amount (A) In general The table contained in section 32(b)(2)(A) of such Code is amended— (i) by striking $4,220 and inserting $8,820 , and (ii) by striking $5,280 and inserting $10,425 . (B) Inflation adjustments Section 32(j)(1)(B) of such Code is amended— (i) by inserting except as provided in clause (iii) in clause (i) before in the case of amounts , (ii) by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and , and by adding at the end the following new clause: (iii) in the case of the $8,820 and $10,425 amounts in subsection (b)(2)(A), by substituting calendar year 2012 for calendar year 1992 in subparagraph (B) of such section 1. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 4. Taxpayer eligible for credit for individuals with no qualifying children if qualifying children do not have valid Social Security numbers (a) In general Section 32(c)(1)(F) of the Internal Revenue Code of 1986 is amended to read as follows: (F) Individuals who do not include TIN, etc., of any qualifying child In the case of any eligible individual who has one or more qualifying children, if— (i) no qualifying child of such individual is taken into account under subsection (b) by reason of paragraph (3)(D), and (ii) no child of such individual is taken into account for purposes of any other child tax benefit under this chapter, for purposes of the credit allowed under this section, such individual may be considered an eligible individual without a qualifying child. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2014. 5. Credit allowed in case of certain separated spouses (a) In general Section 32(d) of the Internal Revenue Code of 1986 is amended— (1) by striking Married individuals.— In the case of and inserting the following: Married individuals.— (1) In general In the case of , and (2) by adding at the end the following new paragraph: (2) Special rule for separated spouse An individual shall not be treated as married for purposes of this section if such individual— (A) is married (within the meaning of section 7703(a)) and files a separate return for the taxable year, (B) lives with a qualifying child of the individual for more than one-half of such taxable year, and (C) (i) during the last 6 months such taxable year, does not have the same principal place of abode as the individual’s spouse, or (ii) has a legally binding separation agreement with the individual’s spouse and is not a member of the same household with the individual’s spouse by the end of the taxable year. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 6. Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family (a) In general Section 32(c)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (G) Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family (i) In general If— (I) an individual is claimed as a qualifying child by an eligible individual for any taxable year of such eligible individual beginning in a calendar year, and (II) such individual is the qualifying child of another eligible individual for any taxable year beginning in such calendar year, such other eligible individual may be treated as an eligible individual without a qualifying child for purposes of this section for such taxable year. (ii) Exception for qualifying child claimed by parent If an individual is claimed as a qualifying child for any taxable year by a parent of such child, clause (i) shall not apply with respect to any other custodial parent of such child. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 7. Elimination of disqualified investment income test (a) In general Section 32 of the Internal Revenue Code of 1986 is amended by striking subsection (i). (b) Conforming amendments (1) Section 32(j)(1)(B)(i) of such Code is amended by striking subsections (b)(2)(A) and (i)(1) and inserting subsection (b)(2)(A) . (2) Section 32(j)(2) of such Code is amended— (A) by striking paragraph (2), and (B) by striking Rounding.— and all that follows through If any dollar amount and inserting the following: Rounding.— If any dollar amount . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.