Summary#
This bill creates a refundable foster care tax credit and new reporting and study requirements. It adds a new Section 36C to the Internal Revenue Code that provides a $850 credit for eligible taxpayers who have a qualifying foster child placed with them for at least one month in a taxable year. The credit is reduced for higher-income taxpayers using modified adjusted gross income thresholds and a $17,000 phase-out range. The bill also adds an information-reporting requirement (new section 6039K) that requires authorized placement agencies and courts to report placements and give statements to foster parents. It adds penalties for failures to file those returns and statements, applies certain preparer due diligence rules to the credit, sets rules to disallow future credits for taxpayers who previously made fraudulent or reckless claims, and allows taxpayers to elect not to claim the child tax credit for a dependent. The Secretary of Health and Human Services, with Treasury, must identify tax provisions that can help foster families and increase outreach; funds are authorized as needed. The bill also requires HHS, with Treasury, to study costs and documentation challenges for families who experience multiple emergency or short-term foster placements and to report to Congress within one year.
What it means for you#
- Foster parents may be able to claim a refundable $850 credit for each taxable year in which a qualifying foster child was placed with them for at least one month. If a foster child lives in the home more than 15 consecutive days in a calendar month, that month counts as a full month.
- A "qualifying foster child" must be under age 17 and a U.S. citizen, national, or resident.
- The credit is reduced if your modified adjusted gross income exceeds thresholds: $250,000 for joint filers, $150,000 for single filers, and $125,000 for married persons filing separately; the reduction uses a $17,000 range.
- If you claim the child tax credit for a dependent foster child, you cannot also claim this foster care credit for that same child unless you elect not to take the child tax credit for that dependent.
- Placement agencies and courts must provide placement information (names, TINs, child name, placement dates) to the IRS and give statements to foster parents by January 31 of the following year.
- If a taxpayer was found to have fraudulently or recklessly claimed the credit in prior years, the bill limits or denies future claims for a set disallowance period.
Expenses#
- The bill sets the credit amount at $850 per eligible taxpayer. The bill header describes the credit as refundable.
- The bill requires placement reporting and adds penalties for failures to file returns or furnish statements; it also applies a preparer due diligence penalty to this credit.
- The Secretary of HHS is authorized to receive and use "such sums as necessary" for outreach to foster families about tax provisions; no dollar amount is specified.
- The bill requires HHS (with Treasury) to study emergency and short-term placements and report to Congress; no cost estimate or total budget impact is provided in the bill text.
- No publicly available information on the total federal cost or a formal budget estimate is included in the bill text or metadata provided.
Proponents' View#
No publicly available information.
Opponents' View#
No publicly available information.