A bill to amend the Internal Revenue Code of 1986 to treat certain tribal benefits and Alaska Permanent Fund dividends as earned income for purposes of the kiddie tax.

Bill: 117-s-2522
Sponsor: full_name: Sen. Murkowski, Lisa [R-AK]
Introduced: 2021-07-28
Policy area: Taxation
Subjects: Disability and paralysis

Federal-Indian relations

Income tax rates

Tax treatment of families
Latest action: action_date: 2021-07-28
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2021-07-28
action_desc: Introduced in Senate
text: <p>This bill treats certain disability payments and other payments made by&nbsp;Indian tribes or Native Corporations to children as the earned income of such children. This exempts such income from the <em>kiddie tax</em> which taxes the unearned income of children at the parent's marginal tax rate.</p>

tv_txt: II 117th CONGRESS 1st Session S. 2522 IN THE SENATE OF THE UNITED STATES July 28, 2021 Ms. Murkowski (for herself and Mr. Sullivan ) 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 treat certain tribal benefits and Alaska Permanent Fund dividends as earned income for purposes of the kiddie tax.

1. Certain amounts treated as earned income for kiddie tax (a) In general Section 1(g)(4)(C) of the Internal Revenue Code of 1986 is amended to read as follows: (C) Treatment of certain amounts as earned income For purposes of this subsection, each of the following amounts shall be treated as earned income of the child referred to in paragraph (1) to the extent included in the gross income of such child: (i) Distributions from qualified disability trusts Any amount included in the gross income of such child under section 652 or 662 by reason of being a beneficiary of a qualified disability trust (as defined in section 642(b)(2)(C)(ii)). (ii) Certain Indian tribal payments Any payment which is included in the gross income of such child and made by an Indian tribal government (as defined in section 139E(c)(1)), or from a trust of which the Indian tribal government is treated as the owner under subpart E of part I of subchapter J, to or for the benefit of such child if— (I) such child or a family member (within the meaning of section 267(c)(4)) is an enrolled member of the tribe with respect to such Indian tribal government, and (II) such payment is made by reason of such enrollment. (iii) Certain payments from Native corporations or Settlement Trusts Any payment which is included in the gross income of such child and— (I) made by a Native corporation (as defined in section 646(h)(2)) to or for the benefit of such child if such child or a family member (within the meaning of section 267(c)(4)) has an equity interest in the Native corporation, or (II) made by a Settlement Trust (as defined in section 646(h)(4)) to or for the benefit of such child if such child or a family member (within the meaning of section 267(c)(4)) has a beneficial interest in such Settlement Trust. (iv) Alaska permanent fund dividends The amount of any Alaska Permanent Fund dividend which is included in the gross income of such child. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2020.