Sec. 1102. Increase and expansion of child tax credit
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Section 24 is amended to read as follows: There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each dependent of the taxpayer an amount equal to $500 ($1,500 in the case of a qualifying child). The credit allowed under subsection
(a)(determined without regard to this subsection) shall be reduced (but not below zero) by 5 percent of the excess (if any) of— the taxpayer’s modified adjusted gross income (as defined in section 2(b)), over the joint return child credit phaseout threshold, in the case of a joint return or a surviving spouse (as defined in section 2(a)), or the non-joint return child credit phaseout threshold, in any other case. For purposes of this section, the term joint return child credit phaseout threshold means, with respect to any taxable year, the sum of— the joint return standard deduction phaseout threshold (as defined in section 63(c)(3)(A)), plus an amount equal to— the dollar amount in effect under section 63(c)(1)(A) for such taxable year, divided by 0.2. For purposes of this section, the term non-joint return child credit phaseout threshold means, with respect to any taxable year, the sum of— the non-joint return standard deduction phaseout threshold (as defined in section 63(c)(3)(B)), plus an amount equal to— the dollar amount in effect under section 63(c)(1)(B) for such taxable year, divided by 0.2. For purposes of this section— Except as provided in paragraph (2), the term qualifying child has the meaning given such term by section 7705. The term qualifying child shall not include any individual who would not be a dependent if subparagraph
(A)of section 7705(b)(3) were applied without regard to all that follows resident of the United States . The aggregate credits allowed under subpart C shall be increased by the lesser of— the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a), or the amount by which the aggregate amount of credits allowed under the subpart (determined without regard to this subsection) would increase if the limitation under section 26(a) were increased by 25 percent of the taxpayer’s earned income for the taxable year. The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection
(a)without regard to section 26(a). For purposes of this subsection— The term earned income means— the taxpayer’s wages, salaries, tips, and other employee compensation, but only if such amounts are includible in gross income for the taxable year, plus the taxpayer’s net earnings from self-employment for the taxable year (within the meaning of section 1402(a)) determined with regard to the deduction allowed to the taxpayer by section 164(f). For purposes of subparagraph (A)— the earned income of an individual shall be computed without regard to any community property laws, no amount received as a pension or annuity shall be taken into account, no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account, no amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account, no amount described in subparagraph
(A)received for service performed in work activities as defined in paragraph
(4)or
(7)of section 407(d) of the Social Security Act to which the taxpayer is assigned under any State program under part A of title IV of such Act shall be taken into account, but only to the extent such amount is subsidized under such State program, and amounts excluded from gross income by reason of section 112 shall be taken into account as earned income. In the case of any taxable year beginning before January 1, 2018, the earned income of the taxpayer taken into account under paragraph
(1)shall be reduced (but not below zero) by $3,000. Paragraph
(1)shall not apply to any taxpayer for any taxable year if such taxpayer elects to exclude any amount from gross income under section 911 for such taxable year. In the case of any taxable year beginning after 2014, each dollar amount in subsection
(a)shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(c)(2)(A) for the calendar year in which the taxable year begins. If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100. No credit shall be allowed under this section to a taxpayer with respect to any dependent unless the taxpayer includes the name and taxpayer identification number of such dependent on the return of tax for the taxable year. Subsection
(d)shall not apply to any taxpayer for any taxable year unless the taxpayer includes the taxpayer’s Social Security number on the return of tax for such taxable year. In the case of a joint return, the requirement of subparagraph
(A)shall be treated as met if the Social Security number of either spouse is included on such return. Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months. . Subparagraph
(I)of section 6213(g)(2) of such Code is amended to read as follows: an omission of a correct TIN under section 24(f)(1) (relating to the child and dependent tax credit), or a correct Social Security number under section 24(f)(2) (relating to the refundable portion of child and dependent tax credit), to be included on a return, . Section 443(c) is amended to read as follows: If a return is made for a short period by reason of subsection (a)(1) and if the tax is not computed under subsection (b)(2), then the credit allowed under section 24 shall be reduced to an amount which bears the same ratio to the full amount of such credit as the number of months in the short period bears to 12. . The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 24 and inserting the following new item: Sec. 24. Child and dependent tax credit. . The amendments made by this section shall apply to taxable years beginning after December 31, 2014.