Sec. 2. Credit for eldercare expenses

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Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section: In the case of an individual for which there are 1 or more qualifying individuals (as defined in subsection (b)(1)) with respect to such individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the eldercare expenses (as defined in subsection (b)(2)) paid by such individual during the taxable year.

For purposes of paragraph (1), the term applicable percentage means 20 percent reduced (but not below zero) by 1 percentage point for each $4,000 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds $120,000. For purposes of this section— The term qualifying individual means the father or mother of the taxpayer or an ancestor of such father or mother, who requires assistance with activities of daily living. The term eldercare expenses means amounts paid for expenses for the care of a qualifying individual.

Eldercare expenses described in subparagraph

(A)which are incurred for services provided outside the taxpayer's household by a care center (as defined in subparagraph (C)) shall be taken into account only if such center complies with all applicable laws and regulations of a State or unit of local government. For purposes of this paragraph, the term care center means any facility which— provides care for more than six individuals, and receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit). The amount of the eldercare expenses incurred during any taxable year which may be taken into account under subsection

(a)shall not exceed $6,000. The dollar amount in paragraph

(1)shall be reduced by the aggregate amount excluded from gross income under section 129 for the taxable year. For purposes of this section— No credit shall be allowed under subsection

(a)for any amount paid to an individual— with respect to whom, for the taxable year, a deduction under section 151(c) (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or his spouse, or who is a child of the taxpayer (within the meaning of section 152(f)(1)) 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. No credit shall be allowed under subsection

(a)for any amount paid to any person unless— the name, address, and taxpayer identification number of such person are included on the return claiming the credit, or 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. No credit shall be allowed under subsection

(a)with respect to any qualifying individual unless the taxpayer identification number of such individual is included on the return claiming the credit. Rules similar to the rules of paragraphs

(2)and

(3)of section 21(e) shall apply. No credit shall be allowed under subsection

(a)for any amount with respect to which a credit is allowed under section 21. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section. . The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item: Sec. 25E. Expenses for eldercare. . Section 213(e) of the Internal Revenue Code of 1986 is amended— by inserting or section 25E after section 21 , and by inserting after and elders in the heading. certain dependents Section 6213(g)(2) of such Code is amended— by inserting , section 25E (relating to expenses for care of elders), after (relating to expenses for household and dependent care services necessary for gainful employment) in subparagraph (H), and by inserting 25E, after 24, in subparagraph (L). The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.