Sec. 31102. Establishment of middle class tax credit
1,556 words·~7 min read·
/bill/116/hr/8352/ih/section-31102·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36 the following new section: In the case of an eligible individual, for any taxable year beginning after December 31, 2018, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to so much of the taxpayer's earned income for the preceding taxable year as does not exceed $3,000. The amount of the credit allowable to the taxpayer under paragraph
(1)for the taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount of the credit determined under such paragraph as— the amount (not less than zero) equal to the adjusted gross income (or, if greater, the earned income) of the taxpayer for the preceding taxable year minus $30,000, bears to $20,000. For purposes of determining the amount of the credit allowed under this section for any taxable year, if a joint return was filed for the preceding taxable year by an eligible individual and such individual's spouse, each of the dollar amounts under paragraphs
(1)and
(2)shall be doubled. For purposes of determining the amount of the credit allowed under this section for any taxable year, if an individual was married during the preceding taxable year (within the meaning of section 7703), this section shall apply only if a joint return was filed for the preceding taxable year under section 6013. For purposes of determining the amount of the credit allowed under this section for any taxable year, if a taxpayer filed a return as a head of household for the preceding taxable year, the reduction of the credit allowable to the taxpayer under paragraph
(1)shall be determined under paragraph
(2)by substituting $60,000 for $30,000 in subparagraph
(A)thereof. In the case of any taxable year after 2019, each of the dollar amounts under paragraphs (1), (2), and
(4)shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2018 for calendar year 2016 in subparagraph (A)(ii) thereof. If any increase determined under subparagraph
(A)is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50. For purposes of determining the credit allowed under this section for any taxable year— The term eligible individual means an individual— who attained 18 years of age before the close of the preceding taxable year, whose principal place of abode was in the United States for more than one-half of the preceding taxable year, who was not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as the preceding taxable year, and who did not claim the benefits of section 911 for the preceding taxable year. The term eligible individual shall not include any individual who is a nonresident alien individual for any portion of the preceding taxable year, unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection
(g)or
(h)of section 6013. No credit shall be allowed under this section to an eligible individual who does not include on the return of tax for the taxable year— such individual's taxpayer identification number, and if the individual was married during the preceding taxable year (within the meaning of section 7703), the taxpayer identification number of such individual's spouse. For purposes of subparagraph (A)(ii), the principal place of abode of a member of the Armed Forces of the United States shall be treated as in the United States during any period during which such member is stationed outside the United States while serving on extended active duty with the Armed Forces of the United States. For purposes of the preceding sentence, the term extended active duty means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period. The term earned income has the same meaning given such term under section 32(c)(2), except that such term shall include any amounts received by the taxpayer as a Federal Pell Grant under section 401 of the Higher Education Act of 1965. 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. Rules similar to subsection
(k)of section 32 shall apply for purposes of this section. The amount of the credit allowed by this section shall be determined under tables prescribed by the Secretary. The tables prescribed under paragraph
(1)shall reflect the provisions of subsection
(a)and shall have income brackets of not greater than $50 each— for earned income between $0 and the amount of earned income at which the credit is phased out under subsection (a)(2), and for adjusted gross income between the dollar amount at which the phaseout begins under subsection (a)(2) and the amount of adjusted gross income at which the credit is phased out under such subsection. The amount of the credit allowed under this section for any taxable year shall be reduced (but not below zero) by the aggregate amount of any advance payments of such credit under section 7527A for such taxable year. . Chapter 77 of the Internal Revenue Code of 1986 is amended by inserting after section 7527 the following new section: Not later than 6 months after the date of the enactment of the LIFT (Livable Incomes for Families Today) the Middle Class Act , the Secretary shall establish a program for making advance payments of the credit allowed under section 36A on a monthly basis (determined without regard to subsection
(f)of such section) to any taxpayer who— the Secretary has determined will be allowed such credit for the taxable year, and has made an election under subsection (c). For purposes of subsection (a), the amount of the monthly advance payment of the credit provided to a taxpayer during the applicable period shall be equal to the lesser of— an amount equal to— the amount of the credit which the Secretary has determined will be allowed to such taxpayer under section 36A for the taxable year ending in such applicable period, divided by 12, or such other amount as is elected by the taxpayer. For purposes of this section, the term applicable period means the 12-month period from the month of July of the taxable year through the month of June of the subsequent taxable year. A taxpayer may elect to receive an advance payment of the credit allowed under section 36A for any taxable year by including such election on a timely filed return for the preceding taxable year. The Internal Revenue Service shall take such steps as may be appropriate to ensure that taxpayers who are eligible to receive the credit under section 36A are aware of the availability of the advance payment of such credit under this section. The Secretary may prescribe such regulations or other guidance as may be appropriate or necessary for the purposes of carrying out this section. . Any credit or refund allowed or made to any individual by reason of section 36A of the Internal Revenue Code of 1986 (as added by this section) shall not be taken into account as income and shall not be taken into account as resources for purposes of determining the eligibility of such individual or any other individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds. Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting 36A, after 36, . Section 6213(g)(2) of such Code is amended— in subparagraph (F), by inserting or section 36A after credit) ; in subparagraph (G), by inserting or 36A after section 32 ; by striking subparagraph
(K)and inserting the following: an omission of information required by section 32(k)(2) or 36(e) or an entry on the return claiming— the credit under section 32 for a taxable year for which the credit is disallowed under subsection (k)(1) thereof, or the credit under section 36A for a taxable year for which the credit is disallowed under subsection
(d)thereof, ; and in subparagraph (L), by striking or 32 and inserting 32, or 36A . The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 36 the following new item: Sec. 36A. Middle class tax credit. . The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7527 the following: Sec. 7527A. Advance payment of middle class tax credit. . The amendments made by this section shall apply to earned income received after December 31, 2017.