H.R.2438 - Foster Care Tax Credit Act (119th Congress)
Summary
H.R.2438, the Foster Care Tax Credit Act, proposes to amend the Internal Revenue Code of 1986 to create a refundable tax credit for foster families. The bill introduces a new section (36C) to the tax code, providing an $850 credit to eligible taxpayers who have a qualifying foster child placed with them for at least one month during the taxable year, provided they are not already claiming a child tax credit for that child.
The credit is subject to income limitations, phasing out for taxpayers with modified adjusted gross income above certain thresholds ($250,000 for joint returns, $150,000 for unmarried individuals, and $125,000 for married individuals filing separately). The bill also includes provisions for information reporting by placement agencies and courts, penalties for improper claims, and a study on emergency and short-term foster placements.
Finally, the bill mandates the Secretary of Health and Human Services, in coordination with the Secretary of the Treasury, to increase outreach efforts to provide information and educational materials regarding tax provisions that can benefit foster families.
Expected Effects
The primary effect of this bill, if enacted, would be to provide financial assistance to foster families through a refundable tax credit. This could help offset the costs associated with foster care and encourage more families to become foster parents.
Additionally, the bill aims to improve compliance and prevent fraudulent claims through information reporting requirements and penalties for improper claims. The study on emergency and short-term foster placements could lead to further policy recommendations and support for families involved in these types of placements.
Increased outreach and education efforts could also raise awareness of existing tax benefits available to foster families, potentially increasing their utilization.
Potential Benefits
- Financial Relief for Foster Families: The $850 tax credit would provide direct financial assistance to help cover the costs of caring for foster children.
- Incentive for Foster Care: The tax credit may encourage more families to become foster parents, increasing the availability of safe and supportive homes for children in need.
- Improved Compliance: Information reporting requirements and penalties for improper claims would help ensure that the tax credit is used appropriately and prevent fraud.
- Data Collection and Policy Development: The study on emergency and short-term foster placements could inform future policy decisions and lead to targeted support for families involved in these placements.
- Increased Awareness of Tax Benefits: Outreach and education efforts would help foster families understand and access existing tax benefits.
Most Benefited Areas:
Potential Disadvantages
- Income Limitations: The income limitations may exclude some foster families from receiving the full tax credit, potentially reducing its impact.
- Complexity: The eligibility requirements and phase-out rules could make the tax credit difficult for some families to understand and claim.
- Administrative Burden: Information reporting requirements could create an additional administrative burden for placement agencies and courts.
- Potential for Fraud: Despite the penalties for improper claims, there is still a risk of fraud and abuse of the tax credit.
- Limited Credit Amount: The $850 credit may not be sufficient to fully offset the costs of caring for a foster child, particularly for families with multiple foster children or children with special needs.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). By providing financial assistance to foster families, the bill aims to promote the well-being of children in foster care, which can be seen as contributing to the general welfare.
Additionally, the bill's provisions for information reporting and penalties for improper claims are consistent with the government's power to collect taxes and enforce its laws, as outlined in Article I, Section 8 of the Constitution.
However, the bill does not appear to raise any significant constitutional concerns related to individual rights or liberties.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).