Cases: In re Zingale, 693 F.3d 704 (6th Cir. 2012)
Final rules 1
(a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer for which the taxpayer is allowed a deduction under section 151 an amount equal to $1,000.
Amended 2001, 2003, 2004, 2008
- 2008 Pub. L. 110-351 Pub. L. 110–351 inserted “for which the taxpayer is allowed a deduction under section 151” after “of the taxpayer”.
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 101(a), reenacted heading without change and amended text generally, substituting provisions relating to $1,000 per year credit per qualifying child for provisions relating to different credit amounts for calendar years 2003 through 2010 or thereafter.
- 2003 Pub. L. 108-27 Pub. L. 108–27 amended table by deleting items relating to calendar years 2001 and 2002 and increasing per child amount from $600 to $1,000 for calendar years 2003 or 2004.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(a), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer an amount equal to $500 ($400 in the case of taxable years beginning in 1998).”
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(b) Limitations
Amended 2001, 2002, 2005, 2008, 2009, 2010, 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(B)(i), struck out par. (3). Prior to amendment, text read as follows: “In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
“(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
“(B) the sum of the credits allowable under this subpart (other than this section and sections 23, 25A(i), 25B, 25D, 30, 30B, and 30D) and section 27 for the taxable year.”
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(b)(2)(A), (c), as amended by Pub. L. 111–312, § 101(b)(1), temporarily struck out “23,” before “25A(i),”. See Effective and Termination Dates of 2010 Amendment note below.
- 2009 Pub. L. 111-5 Pub. L. 111–5, § 1144(b)(1)(A), inserted “30B,” after “30,”.
- 2009 Pub. L. 111-5 Pub. L. 111–5, § 1142(b)(1)(A), inserted “30,” after “25D,”.
- 2009 Pub. L. 111-5 Pub. L. 111–5, § 1004(b)(1), inserted “25A(i),” after “23,”.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 205(d)(1)(A), substituted “25D, and 30D” for “and 25D”.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 106(e)(2)(B), substituted “, 25B, and 25D” for “and 25B”.
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 402(i)(3)(B)(i), substituted “In the case of a taxable year to which section 26(a)(2) does not apply, the credit” for “The credit” in introductory provisions.
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 417(23)(A), amended directory language of Pub. L. 107–16, § 618(b)(2)(A). See 2001 Amendment note below.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(A), amended heading generally, substituting “Limitations” for “Limitation based on adjusted gross income”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(1), added par. (3).
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 618(b)(2)(A), as amended by Pub. L. 107–147, § 417(23)(A), substituted “sections 23 and 25B” for “section 23”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(f)(2)(B), substituted “this section and section 23” for “this section”.
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(1) Limitation based on adjusted gross income The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 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.
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(B), amended heading generally, substituting “Limitation based on adjusted gross income” for “In general”.
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(2) Threshold amount For purposes of paragraph (1), the term “threshold amount” means—
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(A) $110,000 in the case of a joint return,
(B) $75,000 in the case of an individual who is not married, and
(C) $55,000 in the case of a married individual filing a separate return.
For purposes of this paragraph, marital status shall be determined under section 7703.
(c) Qualifying child For purposes of this section—
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(1) In general The term “qualifying child” means a qualifying child of the taxpayer (as defined in section 152(c)) who has not attained age 17.
Amended 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 204(a), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The term ‘qualifying child’ means any individual if—
“(A) the taxpayer is allowed a deduction under section 151 with respect to such individual for the taxable year,
“(B) such individual has not attained the age of 17 as of the close of the calendar year in which the taxable year of the taxpayer begins, and
“(C) such individual bears a relationship to the taxpayer described in section 32(c)(3)(B).”
(2) Exception for certain noncitizens The term “qualifying child” shall not include any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows “resident of the United States”.
Amended 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 204(b), substituted “subparagraph (A) of section 152(b)(3)” for “the first sentence of section 152(b)(3)”.
(d) Portion of credit refundable
Amended 1998, 2001, 2008, 2009, 2010, 2013, 2014, 2015, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(3), redesignated par. (5) as (3).
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 101(b), struck out pars. (3) and (4) which related to inflation adjustment and special rule for certain years, respectively.
- 2015 Pub. L. 114-27 Pub. L. 114–27 added par. (5).
- 2014 Pub. L. 113-295 Pub. L. 113–295 amended par. (4) generally. The amendment was effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which the amendment related. As amended by Pub. L. 111–5, § 1003(a), par. (4) read as follows: “Special rule for 2009 and 2010.—Notwithstanding paragraph (3), in the case of any taxable year beginning in 2009 or 2010, the dollar amount in effect for such taxable year under paragraph (1)(B)(i) shall be $3,000.” See 2009 Amendment and Effective Date of 2014 Amendment notes below.
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 103(b), which directed substitution of “for certain years” for “2009, 2010, 2011, and 2012” in heading and “after 2008 and before 2018” for “in 2009, 2010, 2011, or 2012” in text, could not be executed because of the subsequent general amendment of subsec. (d)(4) by Pub. L. 113–295, which was effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which the amendment related. See 2014 Amendment note above and Effective Date of 2014 Amendment note below.
- 2010 Pub. L. 111-312 Pub. L. 111–312, § 103(b), which directed substitution of “2009, 2010, 2011, and 2012” for “2009 and 2010” in heading and “, 2010, 2011, or 2012” for “or 2010” in text, could not be executed because of the subsequent general amendment of subsec. (d)(4) by Pub. L. 113–295, which was effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which the amendment related. See 2014 Amendment note above and Effective Date of 2014 Amendment note below.
- 2009 Pub. L. 111-5 Pub. L. 111–5, § 1003(a), amended par. (4) generally. Prior to amendment, text read as follows: “Notwithstanding paragraph (3), in the case of any taxable year beginning in 2008, the dollar amount in effect for such taxable year under paragraph (1)(B)(i) shall be $8,500.” Par. (4) was subsequently generally amended by Pub. L. 113–295, effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which the amendment related. See 2014 Amendment note above and Effective Date of 2014 Amendment note below.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 501(a), added par. (4).
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(c)(1), amended subsec. heading and heading and text of par. (1) generally. Prior to amendment, text read as follows: “In the case of a taxpayer with three or more qualifying children for any taxable year, the aggregate credits allowed 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 and the limitation under section 26(a); or
“(B) the amount by which the aggregate amount of credits allowed by this subpart (without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the excess (if any) of—
“(i) the taxpayer’s Social Security taxes for the taxable year, over
“(ii) the credit allowed under section 32 (determined without regard to subsection (n)) 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) without regard to section 26(a).”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(c)(2), added par. (4). Former par. (4) redesignated (3).
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6003(a)(1)(A), struck out heading and text of par. (4). Text read as follows: “If the amount of the credit under paragraph (1)(B) exceeds the amount of the credit under paragraph (1)(A), such excess shall be treated as a credit to which subpart C applies. The rule of section 32(h) shall apply to such excess.”
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6003(a)(1)(B), redesignated par. (5) as (3).
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(1) In general The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of—
Amended 1998, 2001, 2004, 2005, 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(B)(ii)(II), substituted “section 26(a)” for “section 26(a)(2) or subsection (b)(3), as the case may be” in concluding provisions.
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 402(i)(3)(B)(ii), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The aggregate credits allowed to a taxpayer 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 and the limitation under subsection (b)(3), or
“(B) the amount by which the amount of credit allowed by this section (determined without regard to this subsection) would increase if the limitation imposed by subsection (b)(3) were increased by the greater of—
“(i) 15 percent of so much of the taxpayer’s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $10,000, or
“(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—
“(I) the taxpayer’s social security taxes for the taxable year, over
“(II) the credit allowed under section 32 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) without regard to subsection (b)(3). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.”
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 104(a), inserted at end of concluding provisions “For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(C)(i), substituted “subsection (b)(3)” for “section 26(a)” wherever appearing in subsec. (d), as amended by Pub. L. 107–16, § 201(c).
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6003(a)(1)(C), added par. (1) and struck out heading and text of former par. (1). Text read as follows: “In the case of a taxpayer with 3 or more qualifying children for any taxable year, the amount of the credit allowed under this section shall be equal to the greater of—
“(A) the amount of the credit allowed under this section (without regard to this subsection and after application of the limitation under section 26), or
“(B) the alternative credit amount determined under paragraph (2).”
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(A) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a) or
Amended 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(B)(ii)(I), substituted “section 26(a)” for “section 26(a)(2) or subsection (b)(3), as the case may be,” in subpar. (A) and in introductory provisions in subpar. (B).
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(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 greater of—
Amended 2001, 2002, 2007, 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(B)(ii)(I), substituted “section 26(a)” for “section 26(a)(2) or subsection (b)(3), as the case may be,” in subpar. (A) and in introductory provisions in subpar. (B).
- 2007 Pub. L. 110-172 Pub. L. 110–172, § 11(c)(1)(A), substituted “the greater of” for “the excess (if any) of” in introductory provisions.
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(b), substituted “aggregate amount of credits allowed by this subpart” for “amount of credit allowed by this section” in introductory provisions.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(C)(ii), substituted “amount of credit allowed by this section” for “aggregate amount of credits allowed by this subpart” in subpar. (B) as amended by Pub. L. 107–16, § 201(c).
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(i) 15 percent of so much of the taxpayer’s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $3,000, or
Amended 2004, 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 101(a), substituted “$3,000” for “$10,000”.
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 102(a), struck out “(10 percent in the case of taxable years beginning before January 1, 2005)” after “15 percent”.
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(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—
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(I) the taxpayer’s social security taxes for the taxable year, over
(II) the credit allowed under section 32 for the taxable year.
Amended 2007
- 2007 Pub. L. 110-172 Pub. L. 110–172, § 11(c)(1)(B), substituted “section 32” for “section”.
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) without regard to section 26(a). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.
(2) Social security taxes For purposes of paragraph (1)—
Amended 1998, 1999, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(d), redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: “For taxable years beginning after December 31, 2001, the credit determined under this subsection for the taxable year shall be reduced by the excess (if any) of—
“(A) the amount of tax imposed by section 55 (relating to alternative minimum tax) with respect to such taxpayer for such taxable year, over
“(B) the amount of the reduction under section 32(h) with respect to such taxpayer for such taxable year.”
- 1999 Pub. L. 106-170 Pub. L. 106–170 substituted “2001” for “1998” in introductory provisions.
- 1998 Pub. L. 105-277 Pub. L. 105–277 substituted “For taxable years beginning after December 31, 1998, the credit” for “The credit”.
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6003(a)(1)(C), added par. (2) and struck out heading and text of former par. (2). Text read as follows: “For purposes of this subsection, the alternative credit amount is the amount of the credit which would be allowed under this section if the limitation under paragraph (3) were applied in lieu of the limitation under section 26.”
(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 sections 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,
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(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) on amounts received by the taxpayer during the calendar year in which the taxable year begins.
Amended 2001, 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 408(b)(4), amended directory language of Pub. L. 107–90. See 2001 Amendment note below.
- 2001 Pub. L. 107-90 Pub. L. 107–90, as amended by Pub. L. 108–311, § 408(b)(4), substituted “section 3211(a)” for “section 3211(a)(1)”.
(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 subparagraph.
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(3) Exception for taxpayers excluding foreign earned income Paragraph (1) shall not apply to any taxpayer for any taxable year if such taxpayer elects to exclude any amount from gross income under section 911 for such taxable year.
Amended 1998, 2001, 2015, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(3), redesignated par. (5) as (3).
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 101(b), struck out pars. (3) and (4) which related to inflation adjustment and special rule for certain years, respectively.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(d)(2), redesignated par. (4) as (3). Former par. (3) redesignated (2).
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6003(a)(1)(A), (B), (2), redesignated par. (5) as (3), substituted “paragraph (1)” for “paragraph (3)” in introductory provisions, and struck out heading and text of former par. (3). Text read as follows: “The limitation under this paragraph for any taxable year is the limitation under section 26 (without regard to this subsection)—
“(A) increased by the taxpayer’s social security taxes for such taxable year, and
“(B) reduced by the sum of—
“(i) the credits allowed under this part other than under subpart C or this section, and
“(ii) the credit allowed under section 32 without regard to subsection (m) thereof.”
(e) Identification requirements
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 205(a), (b), substituted “requirements” for “requirement” in subsec. heading, designated existing provisions as par. (1), inserted par. heading and “and such taxpayer identification number was issued on or before the due date for filing such return” before period at end, and added par. (2).
(1) Qualifying child identification requirement No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year and such taxpayer identification number was issued on or before the due date for filing such return.
(2) Taxpayer identification requirement No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 101(i)(1), substituted “taxpayer identification number” for “identifying number”.
(f) 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.
(g) Restrictions on taxpayers who improperly claimed credit in prior year
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113, § 208(a)(1), added subsec. (g).
(1) Taxpayers making prior fraudulent or reckless claims
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(A) In general No credit shall be allowed under this section for any taxable year in the disallowance period.
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(B) Disallowance period For purposes of subparagraph (A), the disallowance period is—
(i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to fraud, and
(ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
(2) Taxpayers making improper prior claims In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
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(h) Special rules for taxable years beginning after 2017
Amended 2017, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(a)(3), substituted “beginning after 2017” for “2018 through 2025” in heading.
- 2017 Pub. L. 115-97 Pub. L. 115–97 added subsec. (h).
(1) In general In the case of a taxable year beginning after December 31, 2017, this section shall be applied as provided in paragraphs (2) through (7).
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(a)(1), struck out “, and before January 1, 2026” after “December 31, 2017”.
(2) Credit amount Subsection (a) shall be applied by substituting “$2,200” for “$1,000”.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(a)(2), substituted “$2,200” for “$2,000”.
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(3) Limitation In lieu of the amount determined under subsection (b)(2), the threshold amount shall be $400,000 in the case of a joint return ($200,000 in any other case).
(4) Partial credit allowed for certain other dependents
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(A) In general The credit determined under subsection (a) (after the application of paragraph (2)) shall be increased by $500 for each dependent of the taxpayer (as defined in section 152) other than a qualifying child described in subsection (c).
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(B) Exception for certain noncitizens Subparagraph (A) shall not apply with respect to any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows “resident of the United States”.
(C) Certain qualifying children In the case of any qualifying child with respect to whom a credit is not allowed under this section by reason of paragraph (7), such child shall be treated as a dependent to whom subparagraph (A) applies.
(5) Maximum amount of refundable credit The amount determined under subsection (d)(1)(A) with respect to any qualifying child shall not exceed $1,400, and such subsection shall be applied without regard to paragraph (4) of this subsection.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(d), amended par. (5) generally. Prior to amendment, par. (5) related to maximum amount of refundable credit and its adjustment for inflation.
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(6) Earned income threshold for refundable credit Subsection (d)(1)(B)(i) shall be applied by substituting “$2,500” for “$3,000”.
(7) Social security number required
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(b), amended par. (7) generally. Prior to amendment, par. (7) allowed a credit under this section to a taxpayer with respect to any qualifying child if the taxpayer included the social security number of such child on the tax return for the taxable year.
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(A) In general No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes on the return of tax for the taxable year—
(i) the taxpayer’s social security number (or, in the case of a joint return, the social security number of at least 1 spouse), and
(ii) the social security number of such qualifying child.
(B) Social security number For purposes of this paragraph, the term “social security number” means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued—
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(i) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and
(ii) before the due date for such return.
(i) Inflation adjustments
Amended 2021, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70104(c), amended subsec. (i) generally. Prior to amendment, subsec. (i) related to special rules for 2021 for refundable credit, 17-year-olds eligible for treatment as qualifying children, credit amount, and reduction of increased credit amount based on modified adjusted gross income.
- 2021 Pub. L. 117-2 Pub. L. 117–2, § 9611(a), added subsec. (i).
(1) Maximum amount of refundable credit In the case of a taxable year beginning after 2024, the $1,400 amount in subsection (h)(5) shall be increased by an amount equal to—
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(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2017” for “2016” in subparagraph (A)(ii) thereof.
(2) Special rule for adjustment of credit amount In the case of a taxable year beginning after 2025, the $2,200 amount in subsection (h)(2) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2024” for “2016” in subparagraph (A)(ii) thereof.
(3) Rounding If any increase under this subsection is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
(j) Reconciliation of credit and advance credit
Amended 2021
- 2021 Pub. L. 117-2 Pub. L. 117–2, § 9611(b)(2), added subsec. (j).
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(1) In general The amount of the credit allowed under this section to any taxpayer for any taxable year shall be reduced (but not below zero) by the aggregate amount of payments made under section 7527A to such taxpayer during such taxable year. Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
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(2) Excess advance payments
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(A) In general If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year (determined without regard to paragraph (1)), the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
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(B) Safe harbor based on modified adjusted gross income
(i) In general In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year does not exceed 200 percent of the applicable income threshold, the amount of the increase determined under subparagraph (A) with respect to such taxpayer for such taxable year shall be reduced (but not below zero) by the safe harbor amount.
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(ii) Phase out of safe harbor amount In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year exceeds the applicable income threshold, the safe harbor amount otherwise in effect under clause (i) shall be reduced by the amount which bears the same ratio to such amount as such excess bears to the applicable income threshold.
(iii) Applicable income threshold For purposes of this subparagraph, the term “applicable income threshold” means—
(I) $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)),
(II) $50,000 in the case of a head of household, and
(III) $40,000 in any other case.
(iv) Safe harbor amount For purposes of this subparagraph, the term “safe harbor amount” means, with respect to any taxable year, the product of—
(I) $2,000, multiplied by
(II) the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.
(k) Application of credit in possessions
Amended 2021
- 2021 Pub. L. 117-2 Pub. L. 117–2, § 9612(a), added subsec. (k).
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(1) Mirror code possessions
(A) In general The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning after 2020. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
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(B) Coordination with credit allowed against United States income taxes No credit shall be allowed under this section for any taxable year to any individual to whom a credit is allowable against taxes imposed by a possession of the United States with a mirror code tax system by reason of the application of this section in such possession for such taxable year.
(C) Mirror code tax system For purposes of this paragraph, the term “mirror code tax system” means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
(2) Puerto Rico
(A) Application to taxable years in 2021
(i) For application of refundable credit to residents of Puerto Rico, see subsection (i)(1).
(ii) For nonapplication of advance payment to residents of Puerto Rico, see section 7527A(e)(4)(A).
(B) Application to taxable years after 2021 In the case of any bona fide resident of Puerto Rico (within the meaning of section 937(a)) for any taxable year beginning after December 31, 2021—
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(i) the credit determined under this section shall be allowable to such resident, and
(ii) subsection (d)(1)(B)(ii) shall be applied without regard to the phrase “in the case of a taxpayer with 3 or more qualifying children”.
(3) American Samoa
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(A) In general The Secretary shall pay to American Samoa amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of American Samoa by reason of the application of this section for taxable years beginning after 2020 if the provisions of this section had been in effect in American Samoa (applied as if American Samoa were the United States and without regard to the application of this section to bona fide residents of Puerto Rico under subsection (i)(1)).
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(B) Distribution requirement Subparagraph (A) shall not apply unless American Samoa has a plan, which has been approved by the Secretary, under which American Samoa will promptly distribute such payments to its residents.
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(C) Coordination with credit allowed against United States income taxes
(i) In general In the case of a taxable year with respect to which a plan is approved under subparagraph (B), this section (other than this subsection) shall not apply to any individual eligible for a distribution under such plan.
(ii) Application of section in event of absence of approved plan In the case of a taxable year with respect to which a plan is not approved under subparagraph (B)—
(I) if such taxable year begins in 2021, subsection (i)(1) shall be applied by substituting “bona fide resident of Puerto Rico or American Samoa” for “bona fide resident of Puerto Rico”, and
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(II) if such taxable year begins after December 31, 2021, rules similar to the rules of paragraph (2)(B) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a)).
(4) Treatment of payments For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.