Credit for medical expenses for dependents

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following new section:

25C.

Medical expenses for dependents

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care for any dependent of the taxpayer. (b)

Limitations

(1)

In general

Except as provided in paragraph (2), the credit allowed by this section shall not exceed $500 per dependent for any taxable year. (2)

Increased credit for terminal diseases, etc

In the case of expenses for medical care of a dependent who has a terminal disease, cancer (whether or not in remission), a disability, or any other health condition requiring hospitalization or other forms of specialized care, the credit allowed by this section shall not exceed $3,000 for each such dependent for any taxable year. (c)

Portion of credit refundable

(1)

In general

The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of— (A)the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a), or (B)the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the the taxpayer’s social security taxes for the taxable year. (2)

Coordination with nonrefundable credit

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). (d)

Definitions

For purposes of this section— (1)

Medical care

The term medical care has the meaning given such term by section 213. (2)

Dependent

The term dependent has the meaning given such term by section 152. (3)

Disability

The term disability means a condition that requires qualified long-term care services (as defined in section 7702B(c)). (4)

Social security taxes

The term social security taxes has the meaning given such term by section 24(d)(2). (e)

Exclusion of amounts allowed for care of certain dependents

Any expense allowed as a credit under section 21 shall not be treated as an expense paid for medical care under this section. (f)

Adjustments for inflation

(1)

In general

In the case of any taxable year beginning in a calendar year after 2005, the $500 amount contained in subsection (b)(1), and the $3,000 amount contained in subsection (b)(2), shall each 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 the taxable year begins by substituting calendar year 2004 for calendar year 1992 in subparagraph (B) thereof. (2)

Rounding

If any increase determined under paragraph (1) is not a multiple of $10, such increase shall be rounded to the next highest multiple of $10. (g)

Regulations

The Secretary shall prescribe regulations to carry out this section, including regulations providing for claiming the credit under this section on Form 1040EZ.

(b)

Denial of double benefit for medical expenses deduction

Subsection (e) of section 213 of such Code is amended by inserting or 25C after section 21. (c)

Conforming amendments

(1)The table of sections for such subpart A is amended by inserting after the item relating to section 25B the following new item:

Sec. 25C. Medical expenses for dependents

(2)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by striking section 35 and inserting section 25C or 35. (d)

Effective date

The amendments made by this section shall apply to amounts paid after the date of the enactment of this Act in taxable years ending after such date.