Sec. 5601. Expenses for household and elder care services necessary for gainful employment
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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 25E the following new section: In the case of an individual for which there are one 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 employment-related expenses (as defined in subsection (b)(3)) paid by such individual during the taxable year.
For purposes of paragraph (1), the term applicable percentage means 35 percent reduced (but not below 20 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000. For purposes of this section— The term qualifying individual means an individual who— has attained age 50, and satisfies the requirements of any of the following clauses: An individual who bears a relationship to the taxpayer described in subparagraph
(C)or
(D)of section 152(d)(2) (relating to fathers, mothers, and ancestors). An individual who would be a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1) and (b)(2)) as a qualifying relative described in section 152(d)(1) if— in lieu of the requirements under subparagraphs
(B)and
(C)of such section, with respect to such individual— the taxpayer has provided over one-half of the individual’s support for the calendar year in which such taxable year begins and each of the preceding 4 taxable years, and the individual’s modified adjusted gross income for the calendar year in which such taxable year begins is less than the exemption amount (as defined in section 151(d)), the individual is physically or mentally incapable of caring for himself or herself, and the individual has the same principal place of abode as the taxpayer for more than one-half of such taxable year. The spouse of the taxpayer, if such spouse is physically or mentally incapable of caring for himself or herself. The term modified adjusted gross income means adjusted gross income determined without regard to section 86. 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 one or more qualifying individuals with respect to the taxpayer: Expenses for household services with respect to the qualifying individual. Expenses for the care of a qualifying individual, including expenses for respite care and hospice care. The term employment-related expenses shall not include services provided outside the taxpayer’s household unless such expenses are incurred for the care of— a qualifying individual described in paragraph (1)(A), or a qualifying individual (not described in paragraph (1)(A)) who regularly spends at least 8 hours each day in the taxpayer’s household. The term employment-related expenses shall not include services provided outside the taxpayer’s household by a dependent care center (as defined in subparagraph (D)) unless— such center complies with all applicable laws and regulations of the State and local government in which such center is located, and the requirements of subparagraph
(B)are met. For purposes of this paragraph, the term dependent care center means any facility which— provides care for more than 6 individuals (other than individuals who reside at the facility), 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 employment-related expenses incurred during any taxable year which may be taken into account under subsection
(a)shall not exceed— if there is 1 qualifying individual with respect to the taxpayer for such taxable year, $3,000, or if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year, $6,000. The amount determined under this subsection shall be reduced by the aggregate amount excludable from gross income under section 129 for the taxable year. The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection
(a)shall not exceed— 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 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. For purposes of this section— An individual shall not be treated as having the same principal place of abode of the taxpayer if at any time during the taxable year of the taxpayer the relationship between the individual and the taxpayer is in violation of local law. In the case of an individual who is married as of the close of the taxable year, the credit shall be allowed under subsection
(a)only if a joint return is filed for the taxable year under section 6013. An individual legally separated from his or her spouse under a decree of divorce or of separate maintenance shall not be considered as married. In the case of an individual who is married and does not file a joint return for the taxable year, if— such individual— maintains as his or her home a household which constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and furnishes over half of the cost of maintaining such household during the taxable year, and 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. No credit shall be allowed under subsection
(a)for any amount paid by the taxpayer 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 the taxpayer's spouse, or who— is a child of the taxpayer (within the meaning of section 152(f)(1)), and 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 (as described in clause
(i)of subsection (b)(3)(A)) is performed or the care (as described in clause
(ii)of such subsection) is provided. 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 of tax for the taxable year in which the credit under this section is being claimed, 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 of tax for the taxable year in which the credit under this section is being claimed. 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 this section with respect to any qualifying individual unless the TIN of such individual is included on the return of tax for the taxable year in which the credit under this section is being claimed. 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 25E the following new item: Sec. 25F. Expenses for household and elder care services necessary for gainful employment. . The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.