1.Short
title; amendments to 1986 Code
(a)This Act may be cited
as the Family Tax Relief Act of
2009
.
(b)Except as otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Internal Revenue Code of
1986.
2.Expansion of
dependent care credit
(a)Subpart C of part IV of subchapter A of chapter 1
(relating to refundable credits) is amended by inserting after section 36A the
following new section:
36B.Expenses for
household and dependent care services necessary for gainful employment
(a)
(1)In the case of an
individual for which there are 1 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 subtitle for the taxable year an amount
equal to the applicable percentage of the employment-related expenses (as
defined in subsection (b)(2)) paid by such individual during the taxable
year.
(2)Applicable
percentage definedFor
purposes of paragraph (1), the term applicable percentage means 50
percent reduced (but not below 20 percent) by 1 percentage point for each
$1,000 (or fraction thereof) by which the taxpayer's adjusted gross income for
the taxable year exceeds $30,000.
(b)Definitions of
qualifying individual and employment-related expensesFor purposes of this section—
(1)The term
qualifying individual means—
(A)a dependent of the taxpayer (as defined in
section 152(a)(1)) who has not attained age 13,
(B)a dependent of the taxpayer (as defined in
section 152, determined without regard to subsections (b)(1), (b)(2), and
(d)(1)(B)) who is physically or mentally incapable of caring for himself or
herself and who has the same principal place of abode as the taxpayer for more
than one-half of such taxable year, or
(C)the spouse of the
taxpayer, if the spouse is physically or mentally incapable of caring for
himself or herself and has the same principal place of abode as the taxpayer
for more than one-half of such taxable year.
(2)Employment-related
expenses
(A)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 1 or more qualifying individuals with respect to the taxpayer:
(i)Expenses for
household services.
(ii)Expenses for the
care of a qualifying individual.
Such
term shall not include any amount paid for services outside the taxpayer's
household at a camp where the qualifying individual stays overnight.(B)Employment-related
expenses described in subparagraph (A) which are incurred for services outside
the taxpayer's household shall be taken into account only if incurred for the
care of—
(i)a
qualifying individual described in paragraph (1)(A), or
(ii)a qualifying
individual (not described in paragraph (1)(A)) who regularly spends at least 8
hours each day in the taxpayer's household.
(C)Employment-related expenses described in subparagraph (A)
which are incurred for services provided outside the taxpayer's household by a
dependent care center (as defined in subparagraph (D)) shall be taken into
account only if—
(i)such center
complies with all applicable laws and regulations of a State or unit of local
government, and
(ii)the requirements
of subparagraph (B) are met.
(D)Dependent care
center definedFor purposes of this paragraph, the term
dependent care center means any facility which—
(i)provides care for
more than six individuals (other than individuals who reside at the facility),
and
(ii)receives a fee,
payment, or grant for providing services for any of the individuals (regardless
of whether such facility is operated for profit).
(c)Dollar limit on
amount creditableThe amount of the employment-related expenses
incurred during any taxable year which may be taken into account under
subsection (a) shall not exceed—
(1)$5,000 if there
is 1 qualifying individual with respect to the taxpayer for such taxable year,
or
(2)$10,000 if there
are 2 or more qualifying individuals with respect to the taxpayer for such
taxable year.
The
amount determined under paragraph (1) or (2) (whichever is applicable) shall be
reduced by the aggregate amount excludable from gross income under section 129
for the taxable year.(d)
(1)Except as otherwise provided in this subsection, the
amount of the employment-related expenses incurred during any taxable year
which may be taken into account under subsection (a) shall not exceed—
(A)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
(B)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.
(2)Special rule
for spouse who is a student or incapable of caring for himselfIn
the case of a spouse who is a student or a qualifying individual described in
subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be
deemed for each month during which such spouse is a full-time student at an
educational institution, or is such a qualifying individual, to be gainfully
employed and to have earned income of not less than—
(A)$415 if
subsection (c)(1) applies for the taxable year, or
(B)$830 if
subsection (c)(2) applies for the taxable year.
In the
case of any husband and wife, this paragraph shall apply with respect to only
one spouse for any one month.(e)For purposes of this section—
(1)An individual shall not be treated as having the same
principal place of abode as 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.
(2)Married couples
must file joint returnIf the taxpayer is married at the close of
the taxable year, the credit shall be allowed under subsection (a) only if the
taxpayer and his spouse file a joint return for the taxable year.
(3)An individual legally separated from his spouse under a
decree of divorce or of separate maintenance shall not be considered as
married.
(4)Certain married
individuals living apartIf—
(A)an individual who
is married and who files a separate return—
(i)maintains as his
home a household which constitutes for more than one-half of the taxable year
the principal place of abode of a qualifying individual, and
(ii)furnishes over
half of the cost of maintaining such household during the taxable year,
and
(B)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.(5)Special
dependency test in case of divorced parents, etcIf—
(A)section 152(e)
applies to any child with respect to any calendar year, and
(B)such child is
under the age of 13 or is physically or mentally incapable of caring for
himself,
in the
case of any taxable year beginning in such calendar year, such child shall be
treated as a qualifying individual described in subparagraph (A) or (B) of
subsection (b)(1) (whichever is appropriate) with respect to the custodial
parent (as defined in section 152(e)(3)(A)), and shall not be treated as a
qualifying individual with respect to the noncustodial parent.(6)Payments to
related individualsNo credit shall be allowed under subsection
(a) for any amount paid by the taxpayer to an individual—
(A)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 his spouse, or
(B)who is a child of
the taxpayer (within the meaning of section 152(f)(1)) who 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 is performed.(7)The
term student means an individual who during each of 5 calendar
months during the taxable year is a full-time student at an educational
organization.
(8)The term educational organization means
an educational organization described in section 170(b)(1)(A)(ii).
(9)Identifying
information required with respect to service providerNo credit
shall be allowed under subsection (a) for any amount paid to any person
unless—
(A)the name,
address, and taxpayer identification number of such person are included on the
return claiming the credit, or
(B)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
claiming the credit.
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.(10)Identifying
information required with respect to qualifying individualsNo
credit shall be allowed under this section with respect to any qualifying
individual unless the TIN of such individual is included on the return claiming
the credit.
(f)In the case of any taxable year beginning after
December 31, 2009, the $30,000 amount under subsection (a)(2) and each of the
dollar amounts under subsection (c) shall be increased by an amount equal
to—
(1)such dollar
amount, multiplied by
(2)the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins by substituting 2008
for
1992
in subparagraph (B) thereof.
If the
dollar amount as adjusted under the preceding sentence is not a multiple of
$10, such amount shall be rounded to the nearest multiple of $10.(g)The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of this
section.
.
(b)
(1)Subpart A of part
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by striking section 21.
(2)Section 23(f)(1)
(relating to filing requirements) is amended by striking section
21(e)
and inserting section 36B(e)
.
(3)Section 35(g)(6)
(relating to marital status) is amended by striking section
21(e)
and inserting section 36B(e)
.
(4)Section 129(a)(2)
(relating to limitation of exclusion) is amended by striking section
21(e)
and inserting section 36B(e)
.
(5)Section 129(b)(2)
(relating to special rule for certain spouses) is amended by striking
section 21(d)(2)
and inserting section
36B(d)(2)
.
(6)Section 129(e)(1)
(relating to dependent care assistance) is amended by striking section
21(b)(2)
and inserting section 36B(b)(2)
.
(7)Section 213(e)
(relating to exclusion of amounts allowed for care of certain dependents) is
amended by striking section 21
and inserting section
36B
.
(8)Section
6213(g)(2) (relating to mathematical or clerical error) is amended—
(A)by striking
section 21
in subparagraph (H) and inserting section
36B
, and
(B)by striking
section 21, 24, or 32
in subparagraph (L) and inserting
section 24, 32, or 36B
.
(c)
(1)The table of sections for subpart C 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 36A the following new
item:
Sec. 36B. Expenses for
household and dependent care services necessary for gainful
employment.
.
(2)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 striking the item relating to section
21.
(d)The amendments made by this section shall apply to taxable
years beginning after December 31, 2008.
3.Rules relating to employer-provided
dependent care benefits
(a)
(1)Section 129(a)(2) (relating to limitation
on exclusion) is amended—
(A)by striking $5,000
and
inserting the applicable dollar limit
, and
(B)by striking $2,500
and
inserting one-half of such limit
.
(2)Section 129(a) is amended by adding at the
end the following new paragraph:
(3)For purposes of this subsection—
(A)The applicable dollar limit is $7,500
($10,000 if dependent care assistance is provided under the program to 2 or
more qualifying individuals of the employee).
(B)Cost-of-living adjustmentsIn the case of taxable years beginning
after 2009, each dollar amount under subparagraph (A) shall be increased by an
amount equal to—
(i)such dollar amount, multiplied by
(ii)the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting 2008
for 1992
in
subparagraph (B) thereof.
If any dollar amount as increased
under this clause is not a multiple of $100, such dollar amount shall be
rounded to the next lowest multiple of
$100..
(b)
(1)Section 129(d)(8)(A) (relating to benefits)
is amended—
(A)by striking 55 percent
and
inserting 60 percent
, and
(B)by striking highly compensated
employees
the second place it appears and inserting employees
receiving benefits
.
(2)Salary reduction agreementsSection 129(d)(8)(B) (relating to salary
reduction agreements) is amended—
(A)by striking $25,000
and
inserting $30,000
, and
(B)by adding at the end the following:
In the case of years beginning after 2009, the $30,000 amount in the
first sentence shall be adjusted at the same time, and in the same manner, as
the applicable dollar amount is adjusted under subsection
(a)(3)(B).
.
(c)Principal shareholders or
ownersSection 129(d)(4)
(relating to principal shareholders and owners) is amended by adding at the end
the following: In the case of any failure to meet the requirements of
this paragraph for any year, amounts shall only be required by reason of the
failure to be included in gross income of the shareholders or owners who are
members of the class described in the preceding sentence.
.
(d)The amendments made by
this section shall apply to taxable years beginning after December 31,
2008.