Child and Dependent Care Modernization Act of 2018

Bill: 115-hr-7057
Sponsor: full_name: Rep. Wagner, Ann [R-MO-2]
Introduced: 2018-10-09
Policy area: Taxation
Subjects: Adult day care

Child care and development

Employee benefits and pensions

Income tax exclusion
Latest action: action_date: 2018-10-09
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2018-10-09
action_desc: Introduced in House
text: <p><b>Child and Dependent Care Modernization Act of 2018 </b></p> <p>This bill amends the Internal Revenue Code, with respect to employer-provided dependent care assistance programs, to: (1) increase the amounts of dependent care assistance that employees may exclude from gross income, (2) require the increased limits to be adjusted for inflation after 2019, and (3) allow certain unused dependent care flexible spending account balances to be carried forward into the next year. </p>

tv_txt: I 115th CONGRESS 2d Session H. R. 7057 IN THE HOUSE OF REPRESENTATIVES October 9, 2018 Mrs. Wagner (for herself and Mr. Sessions ) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code to increase the exclusion for employer-provided dependent care assistance and to allow limited annual carryforward of unused dependent care flexible spending arrangement account balances.

1. Short title This Act may be cited as the Child and Dependent Care Modernization Act of 2018 . 2. Increase in exclusion for employer-provided dependent care assistance (a) In general Section 129(a)(2) of the Internal Revenue Code of 1986 is amended— (1) by striking shall not exceed in subparagraph (A) and all that follows and inserting the following: shall not exceed— (i) $8,000 (half such dollar amount in the case of a separate return by a married individual) if there is 1 qualifying individual with respect to the taxpayer during such taxable year, or (ii) $16,000 (half such dollar amount in the case of such a separate return) if there are 2 or more qualifying individuals with respect to the taxpayer during such taxable year. ; and (2) by adding at the end the following new subparagraph: (D) Qualifying individual For purposes of this paragraph, the term qualifying individual has the meaning given to such term under section 21(b)(1). . (b) Inflation adjustment Section 129(a)(2) of such Code is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph: (C) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2019, the dollar amounts in clauses (i) and (ii) of subparagraph (A) 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 2018 for calendar year 1992 in subparagraph (A)(ii) thereof. Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $100. . (c) Conforming amendment Section 129(a)(2). (d) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2018. 3. Carryforward and limitation for dependent care flexible spending arrangement account balance (a) In general Section 125 of the Internal Revenue Code of 1986 is amended by redesignating subsections (k) and (l) as subsections (l) and (m), respectively and by inserting after subsection (j) the following new subsection: (k) Rules for dependent care flexible spending arrangements (1) Carryforward of unused dependent care benefits For purposes of this title, a plan or other arrangement shall not fail to be treated as a cafeteria plan or dependent care flexible spending arrangement merely because such arrangement provides that an amount not exceeding the lesser of— (A) such arrangement’s account balance determined as of the end of any plan year, or (B) the limitation described in paragraph (2) for the succeeding plan year, may be carried forward to the succeeding plan year of such flexible spending arrangement. (2) Cumulative limitation For purposes of this section, if a benefit is provided under a cafeteria plan through a dependent care flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless it provides that the account balance of the employee shall not exceed the dollar limitation in effect with respect to the employee under section 129(a)(2)(A) for such plan year. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2018.