Refundable credit for long-term care

(a)

General rule

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:

36.

Family care credit

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of $3,000 multiplied by the number of applicable individuals with respect to whom the taxpayer is an eligible caregiver for the taxable year. (b)

Limitation

(1)

Applicable individuals taken into account

For purposes of this section, a taxpayer may not take into account more than 2 applicable individuals (4 in the case of a joint return) for any taxable year. (2)

Based on adjusted gross income

(A)

In general

The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $100 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (B)

Threshold amount

For purposes of this paragraph, the term threshold amount means— (i)$150,000 in the case of a joint return, and (ii)$100,000 in the case of an individual who is not married, and (iii)$75,000 in the case of a married individual filing a separate return. (c)

Definitions

For purposes of this section— (1)

Applicable individual

(A)

In general

The term applicable individual means, with respect to any taxable year, any individual who has been certified, before the due date for filing the return of tax for the taxable year (determined without regard to extensions), by a physician (as defined in section 1861(r) of the Social Security Act) as being an individual with long-term care needs described in subparagraph (B) for a period— (i)which is at least 180 consecutive days, and (ii)a portion of which occurs within the taxable year.

Such term shall not include any individual otherwise meeting the requirements of the preceding sentence unless within the 39½ month period ending on such due date (or such other period as the Secretary prescribes) a physician (as so defined) has certified that such individual meets such requirements.

(B)

Individuals with long-term care needs

An individual is described in this subparagraph if the individual meets any of the following requirements: (i)The individual is at least 6 years of age and— (I)is unable to perform (without substantial assistance from another individual) at least 3 activities of daily living (as defined in section 7702B(c)(2)(B)) due to a loss of functional capacity, (II)requires substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment and is unable to perform at least 1 activity of daily living (as so defined) or to the extent provided in regulations prescribed by the Secretary (in consultation with the Secretary of Health and Human Services), is unable to engage in age appropriate activities, or (III)requires substantial supervision to protect such individual from threats to health and safety due to a severe psychological disability, mental retardation, or related developmental disabilities and would otherwise require residence in a psychiatric hospital, an intermediate care facility for the mentally retarded, or similar residential facility approved by the Secretary of Health and Human Services. (ii)The individual is at least 2 but not 6 years of age and is unable due to a loss of functional capacity to perform (without substantial assistance from another individual) at least 2 of the following activities: eating, transferring, or mobility. (iii)The individual is under 2 years of age and requires specific durable medical equipment by reason of a severe health condition or requires a skilled practitioner trained to address the individual’s condition to be available if the individual’s parents or guardians are absent. (C)

Psychological disability defined

The term psychological disability means any diagnosable clinical condition on Axis I or Axis II of the current edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders which is of a severity that requires substantial supervision or residence in a psychiatric hospital or similar residential facility approved by the Secretary. (D)

Mental retardation defined

The term mental retardation means any developmental disability (as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 15002)) which is of a severity that requires substantial supervision or residence in an intermediate care facility for the mentally retarded, or similar residential facility approved by the Secretary of Health and Human Services. (2)

Eligible caregiver

(A)

In general

A taxpayer shall be treated as an eligible caregiver for any taxable year with respect to the following individuals: (i)The taxpayer. (ii)The taxpayer’s spouse. (iii)An individual with respect to whom the taxpayer is allowed a deduction under section 151 for the taxable year. (iv)An individual who would be described in clause (iii) for the taxable year if section 152(d)(1)(B) were applied by substituting for the exemption amount an amount equal to the sum of the exemption amount, the standard deduction under section 63(c)(2)(C), and any additional standard deduction under section 63(c)(3) which would be applicable to the individual if clause (iii) applied. (v)An individual who would be described in clause (iii) for the taxable year if— (I)the requirements of subparagraph (B) are met with respect to the individual in lieu of the support test of section 152(c)(1)(D) or 152(d)(1)(C), as the case may be, and (II)in the case of an individual who is not a qualifying child (as defined in section 152(d)) for the taxable year, the requirements of clause (iv) are met with respect to the individual. (B)

Residency test

The requirements of this subparagraph are met if an individual has as his principal place of abode the home of the taxpayer for the taxable year and— (i)in the case of an individual who is an ancestor or descendant of the taxpayer or the taxpayer’s spouse, is a member of the taxpayer’s household for over half the taxable year, or (ii)in the case of any other individual, is a member of the taxpayer’s household for the entire taxable year. (C)

Special rules where more than 1 eligible caregiver

(i)

In general

If more than 1 individual is an eligible caregiver with respect to the same applicable individual for taxable years ending with or within the same calendar year, a taxpayer shall be treated as the eligible caregiver if each such individual (other than the taxpayer) files a written declaration (in such form and manner as the Secretary may prescribe) that such individual will not claim such applicable individual for the credit under this section. (ii)

No agreement

If each individual required to file a written declaration under clause (i) does not do so, the individual with the highest modified adjusted gross income (as defined in subsection (b)(2)) shall be treated as the eligible caregiver. (iii)

Married individuals filing separately

In the case of married individuals filing separately, the determination under this subparagraph as to whether the husband or wife is the eligible caregiver shall be made under the rules of clause (ii) (whether or not one of them has filed a written declaration under clause (i)). (d)

Identification requirement

No credit shall be allowed under this section to a taxpayer with respect to any applicable individual unless the taxpayer includes the name and taxpayer identification number of such individual, and the identification number of the physician or licensed independent practitioner licensed by the State to render relevant diagnosis certifying such individual, on the return of tax for the taxable year. (e)

Taxable year must be full taxable year

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. (f)

Termination

This section shall not apply to taxable years beginning after December 31, 2010.

(b)

Conforming and Clerical Amendments

(1)Paragraph (2) of section 6213(g) of such Code (relating to mathematical or clerical error) is amended— (A)by striking and at the end of subparagraph (L), by striking the period at the end of subparagraph (M) and inserting , and, and by inserting after subparagraph (M) the following new subparagraph:

(N)an omission of a correct TIN or physician identification required under section 36(d) (relating to family care credit) to be included on a return.

, and

(B)in the matter preceding clause (i) of subparagraph (L), by striking or 32 and inserting 32, or 36. (2)The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 36 and inserting the following:

Sec. 36. Family care credit.

Sec. 37 Overpayments of tax.

(c)

Appropriations for refund

Section 1324(b)(2) of title 31, United States Code, is amended by striking or 53(e) and inserting , 53(e), or 36. (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.