Credit for evacuation expenses in mandatory evacuation

(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 25D the following new section:

25E.

Evacuation expenses in mandatory evacuation

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the qualified evacuation expenses paid or incurred by the taxpayer during the taxable year, but only to the extent not otherwise compensated for by insurance or otherwise. (b)

Dollar limitation

The aggregate amount of qualified evacuation expenses which may be taken into account under subsection (a) for a taxable year shall not exceed $2,000. (c)

Qualified evacuation expenses

For purposes of this section— (1)

In general

The term qualified evacuation expenses means the sum of all travel expenses (including meals and lodging) paid or incurred by the taxpayer during the taxable year by reason of a qualified evacuation. (2)

Qualified evacuation

With respect to an individual, the term qualified evacuation means a mandatory evacuation of an area in which such individual resides on the date of a qualified disaster (as defined in section 139(c)) in any portion of such area. (d)

Portion of credit refundable

(1)

In general

The aggregate credits allowed to an individual 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, 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 individual’s social security taxes for the taxable year.

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).

(2)

Social security taxes

For purposes of paragraph (1)— (A)

In general

The term social security taxes means, with respect to any taxpayer for any taxable year— (i)the amount of the taxes imposed by section 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins, (ii)50 percent of the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and (iii)50 percent of the taxes imposed by section 3211(a)(1) on amounts received by the taxpayer during the calendar year in which the taxable year begins. (B)

Coordination with special refund of social security taxes

The term social security taxes shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c). (C)

Special rule

Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such paragraph. (e)

Denial of double benefit

No credit shall be allowed under subsection (a) for any expense for which an exclusion, deduction, or credit is allowed under any other provision of this chapter. (f)

Election not to have section apply

A taxpayer may elect not to have this section apply with respect to the qualified evacuation expenses of the taxpayer for any taxable year.

(b)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Evacuation expenses in mandatory evacuation.

(c)

Effective date

The amendments made by this section shall apply to taxable years ending after August 29, 2008.