HR 2438
Foster Care Tax Credit Act
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Bill overview
This bill creates a refundable tax credit of $850 for taxpayers who have a qualifying foster child placed in their home for at least one month during the tax year and who are not already receiving a foster care tax credit. The credit is limited based on the taxpayer’s modified adjusted gross income. The bill also establishes a system for reporting foster child placements to the IRS and provides for penalties for fraudulent claims. Additionally, it includes a study on the financial burdens of emergency and short-term foster placements.
Key provisions
- Provides a refundable tax credit of $850 for eligible taxpayers with qualifying foster children.
- Limits the credit based on the taxpayer’s modified adjusted gross income.
- Requires reporting of foster child placements to the IRS.
- Establishes penalties for fraudulent or reckless claims of the credit.
- Creates a system for determining eligibility for the credit.
- Addresses the issue of a taxpayer’s ability to elect not to take the child tax credit.
- Authorizes a study on the financial burdens of emergency and short-term foster placements.
- Requires outreach efforts to provide information to foster care agencies and families.
Who is affected
- Foster families
- Taxpayers with foster children
- Foster care agencies
- State and Indian tribal foster care agencies
- The Internal Revenue Service
Notable changes
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Primary sponsor
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119th CONGRESS — 1st Session
H. R. 2438
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to create a refundable tax credit for foster families, and for other purposes.
This Act may be cited as the Foster Care Tax Credit Act
.
The amount of the credit allowable under subsection (a) (determined without regard to this subsection) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as—
the excess of—
the taxpayer's modified adjusted gross income for such taxable year, over
the threshold amount, bears to
$17,000.
For purposes of paragraph (1), the term threshold amount means—
$250,000, in the case of a joint return,
$150,000, in the case of an individual who is not married, and
$125,000, in the case of a married individual filing a separate return.
For purposes of this paragraph, marital status shall be determined under section 7703.
For purposes of this subsection, the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
for whom a credit under section 24 with respect to such eligible foster child is not allowed for such taxable year.
No credit shall be allowed under this section for any taxable year in the disallowance period.
For purposes of subparagraph (A), the disallowance period is—
the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to fraud, and
the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
Section 6211(b)(4) of the Internal Revenue Code of 1986 is amended by inserting 36C,
after 36B,
.
Section 1324(b)(2) of title 31, United States Code, is amended by inserting 25E,
after 25A,
.
Subpart A of part III of subchapter A of chapter 61 of the Internal Revenue Code of 1986 is amended by inserting after section 6039J the following new section:
Every authorized placement agency and court which places a qualifying foster child with a person during a calendar year shall, at such time as the Secretary shall prescribe, make a return described in subsection (b).
A return is described in this subsection if such return—
is in such form as the Secretary may prescribe, and
contains, with respect to each qualifying foster child placed during the calendar year—
the name, address, and TIN of each individual with whom such qualifying foster child was placed,
the name of the qualifying foster child, and
the dates during which such placement occurred.
Every person required to make a return under subsection (a) shall furnish to each individual whose name is required to be set forth under subsection (b)(2)(A) a written statement showing—
the name and address of the person required to make such return and the phone number of the information contact for such person, and
the information required to be shown on the return with respect to such individual.
The written statement required under paragraph (1) shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) was required to be made.
For purposes of this section, the term qualifying foster child has the meaning given such term under section 36C(c)(2).
Section 6724(d)(1)(B) of such Code is amended by striking or
at the end of clause (xxv), by striking and
at the end of clause (xxvi) and inserting or
, and by inserting after clause (xxvi) the following new clause:
section 6039K (relating to information returns with respect to foster child placement),
Section 6724(d)(2) of such Code is amended by redesignating the second subparagraph (JJ) as subparagraph (KK), by striking or
at the end of subparagraph (II), by striking the period at the end of the first subparagraph (JJ), by striking the period at the end of subparagraph (KK) (as so redesignated) and inserting a comma, and by inserting after such subparagraph (KK) the following new subparagraph:
section 6039K(c) (relating to statements with respect to foster child placement).
The table of sections of subpart A of part III of subchapter A of chapter 61 of such Code is amended by inserting after the item relating to section 6039J the following new item:
Section 24(h)(4) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
A taxpayer may elect not to have this paragraph apply with respect to any dependent of the taxpayer to whom a credit would otherwise be allowed by reason of subparagraph (A). In any case in which a taxpayer makes an election under this subparagraph, the credit allowed under this section shall be treated as not allowed with respect to such dependent.
Section 6695(g) of the Internal Revenue Code of 1986 is amended by striking or 32
and inserting 32, or 36C
.
There are authorized to be appropriated such sums as necessary for the purposes of carrying out paragraph (1).
The Secretary of Health and Human services, in coordination with the Secretary of the Treasury (or the Secretary's delegate), shall conduct a study on—
the costs and financial burdens on foster families who experience multiple emergency and short-term foster placements annually; and
challenges to verifying and documenting the placement of children in emergency and short-term placement.
For purposes of this subsection, a short-term placement is a placement that lasts less than 1 week.
Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to Congress a report on the study conducted under subsection (a).