[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1947 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 1947
To amend the Internal Revenue Code of 1986 to make the dependent care
credit refundable, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 29, 1993
Ms. Snowe 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 the dependent care
credit refundable, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. DEPENDENT CARE TAX CREDIT.
(a) Dependent Care Services.--Subpart C of part IV of subchapter A
of chapter 1 of the Internal Revenue Code of 1986 (relating to
refundable credits) is amended by redesignating section 35 as section
36 and by inserting after section 34 the following new section:
``SEC. 35. DEPENDENT CARE SERVICES.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual who
maintains a household which includes as a member 1 or more
qualifying individuals, there shall be allowed as a credit
against the tax imposed by this subtitle for the taxable year
an amount equal to the applicable percentage of the sum of--
``(A) the employment-related expenses paid by such
individual during the taxable year, plus
``(B) the respite care expenses paid by such
individual during the taxable year.
``(2) Applicable percentage defined.--
``(A) In general.--For purposes of paragraph (1),
the term `applicable percentage' means 50 percent
reduced (but not below 20 percent) by 1 percentage
point for each full $1,000 amount by which the
taxpayer's adjusted gross income for the taxable year
exceeds $15,000.
``(B) Cost-of-living adjustment.--
``(i) In general.--In the case of a taxable
year beginning in a calendar year after 1994,
subparagraph (A) shall be applied by increasing
the $15,000 amount contained therein by the
cost-of-living adjustment (as defined in
section 1(f)(3)) for such calendar year
determined by substituting ``1993'' for
``1989'' in subparagraph (B) of section
1(f)(3).
``(ii) Rounding.--If any increase
determined under clause (i) is not a multiple
of $10, such increase shall be rounded to the
nearest multiple of $10 (or if such increase is
a multiple of $15, such increase shall be
increased to the next highest multiple of $10).
``(b) Employment-Related Expenses.--For purposes of this section--
``(1) Determination of eligible expenses.--
``(A) In general.--The term `employment-related
expenses' means amounts paid for the following
expenses, but only if such expenses are incurred to
enable the taxpayer to be gainfully employed for any
period for which there are 1 or more qualifying
individuals with respect to the taxpayer:
``(i) expenses for household services, and
``(ii) expenses for the care of a
qualifying individual.
Such term shall not include any amount paid for
services outside the taxpayer's household at a camp
where the qualifying individual stays overnight and
shall not include any respite care expense taken into
account under subsection (a).
``(B) Exception.--Employment-related expenses
described in subparagraph (A) which are incurred for
services outside the taxpayer's household shall be
taken into account only if incurred for the care of--
``(i) a qualifying individual described in
subsection (d)(1), or
``(ii) a qualifying individual (not
described in subsection (d)(1)) who regularly
spends at least 8 hours each day in the
taxpayer's household.
``(C) Dependent care centers.--Employment-related
expenses described in subparagraph (A) which are
incurred for services provided outside the taxpayer's
household by a dependent care center (as defined in
subparagraph (D)) shall be taken into account only if--
``(i) such center complies with all
applicable laws and regulations of a State or
unit of local government, and
``(ii) the requirements of subparagraph (B)
are met.
``(D) Dependent care center defined.--For purposes
of this paragraph, the term `dependent care center'
means any facility which--
``(i) provides care for more than 6
individuals (other than individuals who reside
at the facility), and
``(ii) receives a fee, payment, or grant
for providing services for any of the
individuals (regardless of whether such
facility is operated for profit).
``(2) Dollar limit on amount creditable.--
``(A) In general.--The amount of the employment-
related expenses incurred during any taxable year which
may be taken into account under subsection (a) shall
not exceed--
``(i) $2,400 if there is 1 qualifying
individual with respect to the taxpayer for
such taxable year, or
``(ii) $4,800 if there are 2 or more
qualifying individuals with respect to the
taxpayer for such taxable year.
The amount determined under clause (i) or (ii)
(whichever is applicable) shall be reduced by the
aggregate amount excludable from gross income under
section 129 for the taxable year.
``(B) Reduction in limit for amount of respite care
expenses.--The limitation of subparagraph (A) shall be
reduced by the amount of the respite care expenses
taken into account by the taxpayer under subsection (a)
for the taxable year.
``(3) Earned income limitation.--
``(A) In general.--Except as otherwise provided in
this paragraph, the amount of the employment-related
expenses incurred during any taxable year which may be
taken into account under subsection (a) shall not
exceed--
``(i) in the case of an individual who is
not married at the close of such year, such
individual's earned income for such year, or
``(ii) in the case of an individual who is
married at the close of such year, the lesser
of such individual's earned income or the
earned income of his spouse for such year.
``(B) Special rule for spouse who is a student or
incapable of caring for himself.--In the case of a
spouse who is a student or a qualified individual
described in subsection (d)(3), for purposes of
subparagraph (A), such spouse shall be deemed for each
month during which such spouse is a full-time student
at an educational institution, or is such a qualifying
individual, to be gainfully employed and to have earned
income of not less than--
``(i) $200 if paragraph (2)(A)(i) applies
for the taxable year, or
``(ii) $400 if paragraph (2)(A)(ii) applies
for the taxable year.
In the case of any husband and wife, this subparagraph
shall apply with respect to only one spouse for any one
month.
``(c) Respite Care Expenses.--For purposes of this section--
``(1) In general.--The term `respite care expenses' means
expenses paid (whether or not to enable the taxpayer to be
gainfully employed) for--
``(A) the care of a qualifying individual--
``(i) who has attained the age of 13, or
``(ii) who is under the age of 13 but has a
physical or mental impairment which results in
the individual being incapable of caring for
himself,
during any period when such individual regularly spends
at least 8 hours each day in the taxpayer's household,
or
``(B) care (for not more than 14 days during the
calendar year) of a qualifying individual described in
subparagraph (A) during any period during which the
individual does not regularly spend at least 8 hours
each day in the taxpayer's household.
``(2) Dollar limit.--The amount of the respite care
expenses incurred during any taxable year which may be taken
into account under subsection (a) shall not exceed--
``(A) $1,200 if such expenses are incurred with
respect to only 1 qualifying individual for the taxable
year, or
``(B) $2,400 if such expenses are incurred for 2 or
more qualifying individuals for such taxable year.
``(d) Qualifying Individual.--For purposes of this section, the
term `qualifying individual' means--
``(1) a dependent of the taxpayer who is under the age of
13 and with respect to whom the taxpayer is entitled to a
deduction under section 151(e),
``(2) a dependent of the taxpayer who is physically or
mentally incapable of caring for himself, or
``(3) the spouse of the taxpayer, if he is physically or
mentally incapable of caring for himself.
``(e) Special Rules.--For purposes of this section--
``(1) Maintaining household.--An individual shall be
treated as maintaining a household for any period only if over
half the cost of maintaining the household for such period is
furnished by such individual (or, if such individual is married
during such period, is furnished by such individual and his
spouse).
``(2) Married couples must file joint return.--If the
taxpayer is married at the close of the taxable year, the
credit shall be allowed under subsection (a) only if the
taxpayer and his spouse file a joint return for the taxable
year.
``(3) Marital status.--An individual legally separated from
his spouse under a decree of divorce or of separate maintenance
shall not be considered as married.
``(4) Certain married individuals living apart.--If--
``(A) an individual who is married and who files a
separate return--
``(i) maintains as his home a household
which constitutes for more than one-half of the
taxable year the principal place of abode of a
qualifying individual, and
``(ii) furnishes over half the cost of
maintaining such household during the taxable
year, and
``(B) during the last 6 months of such taxable year
such individual's spouse is not a member of such
household,
such individual shall not be considered as married.
``(5) Special dependency test in case of divorced parents,
etc.--If--
``(A) paragraph (2) or (4) of section 152(e)
applies to any child with respect to any calendar year,
and
``(B) such child is under the age of 13 or is
physically or mentally incapable of caring for himself,
in the case of any taxable year beginning in such calendar
year, such child shall be treated as a qualifying individual
with respect to the custodial parent (within the meaning of
section 152(e)(1)), and shall not be treated as a qualifying
individual with respect to the noncustodial parent.
``(6) Payments to related individuals.--No credit shall be
allowed under subsection (a) for any amount paid by the
taxpayer to an individual--
``(A) with respect to whom, for the taxable year, a
deduction under section 151(e) (relating to deduction
for personal exemptions for dependents) is allowable
either to the taxpayer or his spouse, or
``(B) who is a child of the taxpayer (within the
meaning of section 151(e)(3)) who has not attained the
age of 19 at the close of the taxable year.
For purposes of this paragraph, the term `taxable year' means
the taxable year of the taxpayer in which the service is
performed.
``(7) Student.--The term `student' means an individual who
during each of 5 calendar months during the taxable year is a
full-time student at an educational organization.
``(8) Educational organization.--The term `educational
organization' means an educational organization described in
section 170(b)(1)(A)(ii).
``(9) Identifying information required with respect to
service provider.--No credit shall be allowed under subsection
(a) for any amount paid to any person unless--
``(A) the name, address, and taxpayer
identification number of such person are included on
the return claiming the credit, or
``(B) if such person is an organization described
in section 501(c)(3) and exempt from tax under section
501(a), the name and address of such person are
included on the return claiming the credit.
In the case of a failure to provide the information required
under the preceding sentence, the preceding sentence shall not
apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information so required.
``(f) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.''
(b) Conforming Amendments.--
(1) Section 21 of such Code is hereby repealed.
(2) Paragraph (2) of section 129(b) of such Code is amended
by striking out ``section 21(d)(2)'' and inserting in lieu
thereof ``section 35(b)(3)(B)''.
(3) Subsection (e) of section 213 of such Code is amended
by striking out ``section 21'' and inserting in lieu thereof
``section 35''.
(c) Technical Amendments.--
(1) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of such Code is amended by striking
out the item relating to section 35 and inserting in lieu
thereof the following:
``Sec. 35. Dependent care services.
``Sec. 36. Overpayments of tax.''
(2) The table of sections for subpart A of such part IV is
amended by striking out the item relating to section 21.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1993.
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