The Earned Income Tax Credit Improvement and Simplification Act 2013
A BILL
To amend the Internal Revenue Code of 1986 to make improvements in the earned income tax credit.
Sec. 2 Certain improvements in the earned income tax credit made permanent
Increase in credit percentage for three or more qualifying children made permanent— Paragraph (1) of section 32(b) of the Internal Revenue Code of 1986 is amended to read as follows:
“(1) Percentages—The credit percentage and the phaseout percentage shall be determined in accordance with the following table:”
Reduction of marriage penalty made permanent—
In general— Subparagraph (B) of section 32(b)(2) of such Code is amended to read as follows:
“(B) Joint returns
“(i) In general—In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000.
“(ii) Inflation adjustment—In the case of any taxable year beginning after 2012, the $5,000 amount in clause (i) 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 “calendar year 2009” for “calendar year 1992” in subparagraph (B) thereof.
“(iii) Rounding—Subparagraph (A) of subsection (j)(2) shall apply after taking into account any increase under clause (ii).”
Conforming amendment— Subsection (b) of section 32 of such Code is amended by striking paragraph (3).
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 3 Strengthening the earned income tax credit for individuals with no qualifying children
Credit for certain individuals over age 21—
In general— Paragraph (1) of section 32(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(G) Special rule for working individuals over age 20 and without qualifying child
“(i) In general—In the case of an individual (or, if the individual is married, either the individual or the individual’s spouse) who—
“(I) has attained the age of 21 but not attained age 25 before the close of the taxable year, and
“(II) is not a full-time student at any time during the taxable year,
“(ii) Student—For purposes of this subparagraph, an individual shall be considered a full-time student if such individual is carrying more than 1/2 the normal full-time work load for the course of study the individual is pursuing.”
Information return matching— Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall develop and implement procedures for checking an individual’s claim for a credit under section 32 of the Internal Revenue Code of 1986, by reason of subsection (c)(1)(G) thereof, against any information return made with respect to such individual under section 6050S (relating to returns relating to higher education tuition and related expenses).
Increased credit—
Credit percentage and phaseout percentage— The table contained in section 32(b)(1)(A) of such Code, as amended by this Act, is amended by striking “7.65” each place it appears and inserting “15.3”.
Earned income amount and phaseout amount—
In general— The table contained in section 32(b)(2)(A) of such Code is amended—
by striking “$4,220” and inserting “$8,820”, and
by striking “$5,280” and inserting “$10,425”.
Inflation adjustments— Subparagraph (B) of section 32(j)(1) of such Code is amended—
by inserting “except as provided in clause (iii)” in clause (i) before “in the case of amounts”,
by striking “and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting “, and”, and by adding at the end the following new clause:
“(iii) in the case of the $8,820 and $10,425 amounts in subsection (b)(2)(A), by substituting “calendar year 2012” for “calendar year 1992” in subparagraph (B) of such section 1.”
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 4 Taxpayer eligible for credit for individuals with no qualifying children if qualifying children do not have valid Social Security number
In general— Subparagraph (F) of section 32(c)(1) of the Internal Revenue Code of 1986 is amended to read as follows:
“(F) Individuals who do not include TIN, etc., of any qualifying child—In the case of any eligible individual who has one or more qualifying children, if—
“(i) no qualifying child of such individual is taken into account under subsection (b) by reason of paragraph (3)(D), and
“(ii) no child of such individual is taken into account for purposes of any other child tax benefit under this chapter,”
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2012.
Sec. 5 Credit allowed in case of certain separated spouses
by striking “Married individuals.—In the case of” and inserting the following:
“(1) In general—In the case of”
by adding at the end the following new paragraph:
“(2) Special rule for separated spouse—An individual shall not be treated as married for purposes of this section if such individual—
“(A) is married (within the meaning of section 7703(a)) and files a separate return for the taxable year,
“(B) lives with a qualifying child of the individual for more than one-half of such taxable year, and
“(C)
“(i) during the last 6 months such taxable year, does not have the same principal place of abode as the individual’s spouse, or
“(ii) has a legally binding separation agreement with the individual’s spouse and is not a member of the same household with the individual’s spouse by the end of the taxable year.”
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 6 Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family
In general— Paragraph (1) of section 32(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(G) Taxpayer eligible for credit without qualifying child if qualifying child claimed by another member of family
“(i) In general—If—
“(I) an individual is claimed as a qualifying child by an eligible individual for any taxable year of such eligible individual beginning in a calendar year, and
“(II) such individual is the qualifying child of another eligible individual for any taxable year beginning in such calendar year,
“(ii) Exception for qualifying child claimed by parent—If an individual is claimed as a qualifying child for any taxable year by a parent of such child, clause (i) shall not apply with respect to any other custodial parent of such child.”
Effective date— The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
Sec. 7 Elimination of disqualified investment income test
In general— Section 32 of the Internal Revenue Code of 1986 is amended by striking subsection (i).
Conforming amendments—
Section 32(j)(1)(B)(i) of such Code is amended by striking “subsections (b)(2)(A) and (i)(1)” and inserting “subsection (b)(2)(A)”.
Section 32(j)(2) of such Code is amended—
by striking paragraph (2), and
by striking “Rounding.—” and all that follows through “If any dollar amount” and inserting the following:“Rounding.—If any dollar amount”
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.