Above-the-line deduction for child care expenses

(a)

In general

Part VII of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended— (1)by redesignating section 224 as section 225, and (2)by inserting after section 223 the following new section:

224.

Child care deduction

(a)

Allowance of deduction

In the case of an individual for which there are 1 or more qualifying children with respect to such individual for the taxable year, there shall be allowed as a deduction an amount equal to the employment-related expenses paid by such individual during the taxable year. (b)

Dollar limitations

(1)

In general

The amount allowed as a deduction under subsection (a) with respect to the taxpayer for any taxable year shall not exceed— (A)$7,000, if there is 1 qualifying child with respect to the taxpayer for such taxable year, or (B)$14,000, if there are 2 or more qualifying children with respect to the taxpayer for such taxable year. (2)

Adjustment for inflation

In the case of a taxable year beginning after 2017, each of the dollar amounts in paragraph (1) shall be increased by an amount equal to— (A)such dollar amount, multiplied by (B)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins, determined by substituting calendar year 2016 for calendar year 1992 in subparagraph (B) thereof.

If any amount as adjusted under the preceding sentence is not a multiple of $100, such amount shall be rounded to the next highest multiple of $100.

(c)

Definitions and special rules

For purposes of this section— (1)

Qualifying child

The term qualifying child means a dependent of the taxpayer (as defined in section 152(a)(1))— (A)who has not attained age 13, or (B)who is physically or mentally incapable of caring for himself or herself. (2)

Employment-related expenses

The term employment-related expenses has the meaning given such term by section 21(b)(2), applied as if the terms qualifying child and qualifying children, within the meaning of this section, were substituted for the terms qualifying individual and qualifying individuals, respectively. (3)

Special rules

Rules similar to the rules of paragraphs (1), (2), (3), (4), (5), (6), (9), and (10) of section 21(e) shall apply. (d)

Denial of double benefit

(1)

In general

No deduction shall be allowed under this section for any expense with respect to which a credit is claimed by the taxpayer under section 21. (2)

Coordination rule

For coordination with a dependent care assistance program, see section 129(e)(7).

(b)

Deduction Allowed Above-the-Line

Subsection (a) of section 62 of the Internal Revenue Code of 1986 is amended by inserting after paragraph (21) the following new paragraph:

(22)

Child care deduction

The deduction allowed by section 224.

(c)

Conforming amendment

Subsection (e) of section 213 of the Internal Revenue Code of 1986 is amended by inserting , or as a deduction under section 224, after section 21. (d)

Clerical amendment

The table of sections for part VII of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 224 and by inserting the following new items:

Sec. 224. Child care deduction.

Sec. 225. Cross reference.

(e)

Effective date

The amendments made by this section shall apply to expenses paid or incurred in taxable years beginning after December 31, 2016.