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Energy Tax Policy: Issues in the 112th Congress [April 14, 2011]
"As in most Congresses, energy tax policy is expected to be actively debated in the 112th Congress. At the beginning of the 112th Congress, the debate may center on the President's FY2012 Budget. This budget proposes a number of changes in energy tax policy with the intent of correcting perceived distortions in the market and encouraging conservation and the use of renewable energy. Specifically, the proposal seeks to eliminate a number of existing tax incentives for fossil fuels, while expanding select incentives for commercial building energy efficiency and promoting manufacturing of advanced energy technologies. Later in the first session of the 112th Congress, the debate may shift to the evaluation of a number of temporary energy tax provisions scheduled to expire at the end of 2011. Many of the provisions scheduled to expire were granted a temporary extension as part of the Tax Relief, Unemployment Reauthorization, and Job Creation Act (P.L. 111-312), enacted in December 2010. Energy tax policy involves the use of one of the government's main fiscal instruments, taxes (both as an incentive and as a disincentive) to alter the allocation or configuration of energy resources and their use. In theory, energy taxes and subsidies, like tax policy instruments in general, are intended either to correct a problem or distortion in the energy markets or to achieve some economic (efficiency, equity, or even macroeconomic) objective. In practice, however, energy tax policy in the United States is made in a political setting, determined by fiscal dictates and the views and interests of the key players in this setting, including policymakers, special interest groups, and academic scholars. As a result, enacted tax policy embodies compromises between economic and political goals, which could either mitigate or compound existing distortions."
Library of Congress. Congressional Research Service
Sherlock, Molly F.; Crandall-Hollick, Margot L.
2011-04-14
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Sustainable Budget Deficit: Overview of Major Expiring Policies in 2011 and 2012 and Their Budgetary Impact [December 16, 2011]
"The federal government runs a deficit when spending (mandatory, discretionary, and interest payments on the debt) is greater than revenues (taxes and fees). Between 2009 and 2011, deficits relative to the size of the economy (i.e., as a percentage of gross domestic product (GDP)) have been at their highest levels in the post-World War II era. In 2011, the federal deficit was 8.5% of GDP, while from 1946 to 2008, the budget deficit averaged 1.7% of GDP. Many experts believe that deficits must be reduced to 'sustainable' levels in order to avoid a budgetary crisis. Large budget deficits can result in a budgetary crisis for two principal reasons. First, as deficits persist, government incurs debt and as a nation's debt grows, so too would interest payments on that debt, limiting spending on other parts of the budget. Second, increasing deficits and debt could also trigger fear among creditors about a government's ability to repay its debts, resulting in an unwillingness by creditors to lend at affordable rates. […] This report compares the budgetary implication of allowing all the policies to expire versus extending all of them in order to show their impact on the medium-term deficit. In the past, when these policies have been extended, they have generally not been offset. This report assumes that future extensions would also not be offset. This report first examines six major policies that are scheduled to expire in 2011 and 2012 and the deficit implications of their extension. Then the report provides data on the annual and aggregate budget implications of extending these major policies."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2011-12-16
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Overview and Comparison of Proposals to Extend the 'Bush Tax Cuts': S. 3412, S. 3413, H.R. 8 [July 30, 2012]
"Many of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16) and the Jobs Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27), henceforth referred to as the Bush tax cuts, are scheduled to expire at the end of 2012. Two bills introduced in the Senate--S. 3412, the Middle Class Tax Cut Act, offered by Senator Reid and S. 3413, the Tax Hike Prevention Act, offered by Senator Hatch--propose to extend some or all of these tax cuts for one year through the end of 2013. A bill introduced in the House--H.R. 8, the Job Protection and Recession Prevention Act of 2012--is virtually identical to S. 3413 except for its treatment of a business expensing provision. On July 25, 2012, the Senate agreed to the Reid proposal by a vote of 51-48, while they rejected the Hatch proposal (which was offered as amendment 2573 to the Reid proposal) by a vote of 45-54. Any further action would be on a house-originated tax measure. The House is expected to vote on H.R. 8 before the August recess. This report is organized to first provide an overview of the Bush tax cuts, followed by brief summaries of S. 3412 and S. 3413, henceforth referred to as the Reid and Hatch proposals, respectively. Revenue loss estimates of certain provisions of these bills are also included, as well as a brief summary of H.R. 8, henceforth referred to as the Camp proposal. In addition, detailed summary tables comparing the Reid and Hatch/Camp proposals--to each other and to current law--are provided. Finally, this report concludes with a brief overview of the current policy debate surrounding the partial or full extension of the Bush tax cuts."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2012-07-30
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Residential Energy Tax Credits: Overview and Analysis [September 25, 2012]
"Residential energy efficiency can benefit consumers through reduced utility bills, and support national environmental policy objectives by reducing the demand for electricity generated using fossil-fuels and reducing current strains on the electric power grid. Various policies to increase conservation and energy efficiency have been adopted since the 1970s, including tax incentives. Developing and deploying technologies that are consistent with the most efficient use of our nation's energy resources is broadly appealing. What remains unclear, however, is what set of policy tools the federal government should employ to meet energy-efficiency objectives. In 2010, 23% of total energy consumed in the United States was consumed by the residential sector (see Figure 1). Residential-sector energy use has been increasing over time, with the residential sector today consuming roughly 8% more energy in 2010 than in 2000. Residential energy use per capita, however, has remained relatively constant since the 1970s (see Figure 2). Thus, while overall demand for energy in the residential sector has increased with population growth, efficiency gains have allowed residential energy use per capita to remain relatively flat even as consumers increasingly use energy-demanding technologies. Although energy-efficiency gains have been made in recent decades, experts suggest that a large potential for increased energy efficiency in the residential sector remains. Despite this potential, concerns remain that consumers may not invest in the optimal level of energy efficiency. If this potential for enhanced energy efficiency is realized in the coming decades, residential energy use trends could change, perhaps leading to reduced residential energy use per capita over time. However, population growth may still result in continued increases in total residential energy use. This report explores one policy option for promoting residential energy efficiency: tax credits. It begins by providing an overview of the current residential energy-efficiency tax credits (appendices to this report provide a more detailed legislative history). The report then goes on to provide an economic rationale for residential energy-efficiency tax incentives, introducing the concept of 'market failures' and 'market barriers' which may lead to suboptimal or 'economically inefficient' investment in energy-efficiency technologies. That section summarizes various market failures and market barriers in the residential energy sector and outlines ways tax incentives correct them. The final sections of this report provide an economic analysis of the primary tax incentives for residential energy efficiency and briefly review various policy options."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Sherlock, Molly F.
2012-09-25
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Higher Education Tax Benefits: Brief Overview and Budgetary Effects [September 25, 2012]
"Since 1997, education tax benefits have become an increasingly important component of federal higher education policy. Fourteen tax benefits are currently available for college students and their parents to help pay for higher education. The available tax benefits are a mixture of credits, deductions, exclusions, and other incentives. The benefits can be placed into one of three general categories: incentives for current year expenses, preferential tax treatment of student loans, and incentives for saving for college. The Joint Committee on Taxation (JCT) estimates the cost to the federal government of education tax benefits--the revenue foregone from offering these benefits--to be $78.9 billion between 2011 and 2015. This report provides a brief overview of the higher education tax benefits that are currently available to students and their families. The report contrasts higher education tax benefits with traditional student aid, presents a brief history of higher education tax policy over the past 60 years, summarizes key features of the available tax benefits, and provides JCT estimates of revenue losses resulting from individual tax provisions. The summary is contained in Table 1 and provides information on various aspects of each tax benefit including the type of benefit (credit, deduction, etc.), the annual dollar amount of the benefit, what expenses qualify for the benefit, what level of education the benefit can be claimed for, income levels at which the benefit phases out, any aspects of the benefit that are expiring during the 112th Congress, and recent legislation to extend these temporary changes. Table 2 contains estimates of the annual forgone federal revenue attributable to each provision."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2012-09-25
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Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012 [January 10, 2013]
"On December 31, 2012, a variety of temporary tax provisions which were part of the 'fiscal cliff' expired. Two days later, the American Taxpayer Relief Act of 2012 (ATRA; P.L. [Public Law] 112-240) retroactively extended, and in certain cases modified, many of these provisions. The short time period between the expiration of these provisions and the enactment on January 2 of ATRA retroactively meant that from the perspective of all but upper-income taxpayers, income taxes remained unchanged between 2012 and 2013 (i.e., the amount of income tax withheld from their paycheck and the availability of certain tax deductions, credits, and exclusions remained unchanged). This report provides an overview of the tax provisions (Titles I-IV and Title X of P.L. 112-240) included in the 'fiscal cliff deal,' including 1. the permanent extension and modification of the 2001 and 2003 tax cuts, often referred to collectively as the 'Bush-era tax cuts'; 2. the temporary extension of certain tax provisions originally included as part of the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), often referred to as the '2009 tax cuts'; 3. the permanent extension of the alternative minimum tax (AMT) patch; 4. the temporary extension of a variety of other temporary expiring provisions for individuals, businesses, and energy often referred to as 'tax extenders'; and 5. the expansion of in-plan conversions of traditional employer-sponsored retirement accounts (like 401(k) plans) to employer-sponsored Roth accounts (like Roth 401(k) plans)."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2013-01-10
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'Fiscal Cliff' and the American Taxpayer Relief Act of 2012 [January 4, 2013]
"In the context of large budget deficits, Congress was faced with a variety of policies that were set to reduce spending and increase revenues at the end of 2012, referred to by some as the 'fiscal cliff.' Had these policies taken effect, CBO [Congressional Budget Office] projected that the ensuing fiscal contraction would have resulted in a recession in 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (ATRA; H.R. 8 as enacted), which prevented many--but not all--of the fiscal cliff policies from going into effect. Budget issues are likely to continue into the 113th Congress surrounding two issues that the ATRA did not resolve. First, financing of the federal budget for the last six months of the fiscal year is unresolved because of uncertainties associated with the debt limit and appropriations. More specifically, the continuing resolution to fund the federal government, enacted in September, runs out at the end of March and current fiscal policy would require an increase to the debt limit in early 2013 to meet existing obligations. Second, the federal debt remains on an unsustainable path in the long-term because of the imbalance between spending and revenues. This report provides a brief overview of the major tax and spending policies that comprised the 'fiscal cliff.' It discusses how the provisions of ATRA did and did not address these policies and provides information on additional budget-related considerations for the 113th Congress."
Library of Congress. Congressional Research Service
Levit, Mindy R.; Crandall-Hollick, Margot L.; Hahn, Jim
2013-01-04
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Energy Tax Policy: Issues in the 112th Congress [March 28, 2012]
"Energy tax policy has been actively debated in the 112th Congress. Much of this debate has centered around proposals in the President's FY2012 and FY2013 budgets, proposals to eliminate certain tax preferences, and proposals to extend other expired or expiring provisions. The Obama Administration has proposed a number of changes in energy tax policy with the intent of correcting perceived distortions in the market and encouraging conservation and the use of renewable energy. Specifically, the Administration seeks to eliminate a number of existing tax incentives for fossil fuels. Further, the Administration has proposed expanding select incentives for commercial-building energy efficiency, extending incentives to promote manufacturing of advanced energy technologies, extending certain renewable energy incentives, and modifying incentives for alternative technology vehicles. […] Energy tax policy involves the use of one of the government's main fiscal instruments, taxes (both as an incentive and as a disincentive) to alter the allocation or configuration of energy resources and their use. In theory, energy taxes and subsidies, like tax policy instruments in general, are intended either to correct a problem or distortion in the energy markets or to achieve some economic (efficiency, equity, or even macroeconomic) objective. In practice, however, energy tax policy in the United States is made in a political setting, determined by fiscal dictates and the views and interests of the key players in this setting, including policymakers, special interest groups, and academic scholars. As a result, enacted tax policy embodies compromises between economic and political goals, which could either mitigate or compound existing distortions."
Library of Congress. Congressional Research Service
Sherlock, Molly F.; Crandall-Hollick, Margot L.
2012-03-28
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Higher Education Tax Benefits: Brief Overview and Budgetary Effects [July 10, 2012]
"Since 1997, education tax benefits have become an increasingly important component of federal higher education policy. Fourteen tax benefits are currently available for college students and their parents to help pay for higher education. The available tax benefits are a mixture of credits, deductions, exclusions, and other incentives. The benefits can be placed into one of three general categories: incentives for current year expenses, preferential tax treatment of student loans, and incentives for saving for college. The Joint Committee on Taxation (JCT) estimates the cost to the federal government of education tax benefits--the revenue foregone from offering these benefits--to be $78.9 billion between 2011 and 2015. This report provides a brief overview of the higher education tax benefits that are currently available to students and their families. The report contrasts higher education tax benefits with traditional student aid, presents a brief history of higher education tax policy over the past 60 years, summarizes key features of the available tax benefits, and provides JCT estimates of revenue losses resulting from individual tax provisions."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2012-07-10
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American Opportunity Tax Credit: Overview, Analysis, and Policy Options [June 11, 2012]
"The American Opportunity Tax Credit (AOTC)--enacted on a temporary basis by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5) and extended through the end of 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312)--is a partially refundable tax credit that provides financial assistance to taxpayers who are attending college, or whose children are attending college. The credit, worth up to $2,500 per student, can be claimed for a student's first four years of post-secondary education. In addition, 40% of the credit (up to $1,000) can be received as a refund by taxpayers with little or no tax liability. The credit phases out for taxpayers with income between $80,000 and $90,000 ($160,000 and $180,000 for married couples filing jointly) and is hence unavailable to taxpayers with income above $90,000 ($180,000 for married couples filing jointly). There are a variety of other eligibility requirements associated with the AOTC, including the type of degree the student is pursuing, the number of courses the student is taking, and the type of expenses which qualify. […] There are a variety of policy options Congress may consider regarding the AOTC, including extending the credit, extending a modified AOTC, or repealing the Hope and Lifetime Credits and extending a modified AOTC that includes provisions included in these credits. Alternatively, Congress may want to examine alternative ways to reduce the cost of higher education."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2012-06-11
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Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012 [February 4, 2013]
"On December 31, 2012, a variety of temporary tax provisions which were part of the 'fiscal cliff' expired. Two days later, the American Taxpayer Relief Act of 2012 (ATRA; P.L. [Public Law] 112-240) retroactively extended, and in certain cases modified, many of these provisions. The short time period between the expiration of these provisions and the enactment on January 2 of ATRA retroactively meant that from the perspective of all but upper-income taxpayers, income taxes remained unchanged between 2012 and 2013 (i.e., the amount of income tax withheld from their paycheck and the availability of certain tax deductions, credits, and exclusions remained unchanged). This report provides an overview of the tax provisions (Titles I-IV and Title X of P.L. 112-240) included in the 'fiscal cliff deal,' including 1. the permanent extension and modification of the 2001 and 2003 tax cuts, often referred to collectively as the 'Bush-era tax cuts'; 2. the temporary extension of certain tax provisions originally included as part of the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), often referred to as the '2009 tax cuts'; 3. the permanent extension of the alternative minimum tax (AMT) patch; 4. the temporary extension of a variety of other temporary expiring provisions for individuals, businesses, and energy often referred to as 'tax extenders'; and 5. the expansion of in-plan conversions of traditional employer-sponsored retirement accounts (like 401(k) plans) to employer-sponsored Roth accounts (like Roth 401(k) plans)."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2013-02-04
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Potential Federal Tax Implications of 'United States v. Windsor' (Striking Section 3 of the Defense of Marriage Act (DOMA)): Selected Issues [July 18, 2013]
"This report will provide an overview of the potential federal tax implications for same-sex married couples of the U.S. Supreme Court (SCOTUS) ruling in 'United States v. Windsor', with a focus on the federal income tax. Estate tax issues are also discussed. Importantly, this report focuses on changes in the 'interpretation and administration' of federal tax law that may result from the SCOTUS decision. This decision did not amend federal tax law. This report is not intended to address 'all' tax-related issues that may arise as a result of the 'Windsor' decision. Such discussion is beyond the scope of this report."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Sherlock, Molly F.; Pettit, Carol A.
2013-07-18
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Child Tax Credit: Current Law and Legislative History [July 17, 2014]
"This report provides an overview of the child tax credit under current law, as well as a legislative history of this tax benefit, which helps explain its purpose and current structure. When calculating the total amount of federal income taxes owed, eligible taxpayers can reduce their federal income tax liability by the amount of the child tax credit. Currently, eligible families that claim the child tax credit can subtract up to $1,000 per qualifying child from their federal income tax liability. The maximum amount of credit a family can receive is equal to the number of qualifying children in a family times $1,000. If a family's tax liability is less than the value of their child tax credit, they may be eligible for a refundable credit calculated using the earned income formula. Under this formula, a family is eligible for a refund equal to 15% of their earnings in excess of $3,000, up to the maximum amount of the credit. (This $3,000 amount is referred to as the 'refundability threshold'.) The credit phases out for single parents with income over $75,000 and married couples with income over $110,000."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2014-07-17
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American Opportunity Tax Credit: Overview, Analysis, and Policy Options [July 28, 2014]
"The American Opportunity Tax Credit (AOTC)--enacted on a temporary basis by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5) and extended through the end of 2017 by the American Taxpayer Relief Act of 2012 (P.L. 112-240; ATRA)--is a partially refundable tax credit that provides financial assistance to taxpayers who are attending college, or whose children are attending college. The credit, worth up to $2,500 per student, can be claimed for a student's qualifying expenses incurred during the first four years of post-secondary education. In addition, 40% of the credit (up to $1,000) can be received as a refund by taxpayers with little or no tax liability. The credit phases out for taxpayers with income between $80,000 and $90,000 ($160,000 and $180,000 for married couples filing jointly) and is hence unavailable to taxpayers with income above $90,000 ($180,000 for married couples filing jointly). There are a variety of other eligibility requirements associated with the AOTC, including the type of degree the student is pursuing, the number of courses the student is taking, and the type of expenses which qualify. Prior to the enactment of the AOTC, there were two permanent education tax credits, the Hope Credit and the Lifetime Learning Credit. The AOTC has temporarily replaced the Hope Credit from 2009 through the end of 2017 (the Lifetime Learning Credit remains unchanged). A comparison of these two credits indicates that the AOTC is both larger--on a per capita and aggregate basis--and more widely available in comparison to the Hope Credit. Data from the Internal Revenue Service (IRS) indicate that enactment of the AOTC contributed to a more than tripling of both the aggregate value of education credits claimed by taxpayers and the number of taxpayers claiming these credits."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2014-07-28
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Child Tax Credit: Current Law and Legislative History [July 28, 2014]
"This report provides an overview of the child tax credit under current law, as well as a legislative history of this tax benefit, which helps explain its purpose and current structure. When calculating the total amount of federal income taxes owed, eligible taxpayers can reduce their federal income tax liability by the amount of the child tax credit. Currently, eligible families that claim the child tax credit can subtract up to $1,000 per qualifying child from their federal income tax liability. The maximum amount of credit a family can receive is equal to the number of qualifying children in a family times $1,000. If a family's tax liability is less than the value of their child tax credit, they may be eligible for a refundable credit calculated using the earned income formula. Under this formula, a family is eligible for a refund equal to 15% of their earnings in excess of $3,000, up to the maximum amount of the credit. (This $3,000 amount is referred to as the 'refundability threshold.') The credit phases out for single parents with income over $75,000 and married couples with income over $110,000. The child tax credit was created in 1997 by the Taxpayer Relief Act of 1997 (P.L. 105-34) to help ease the financial burden that families incur when they have children. Like other tax credits, the child tax credit reduces tax liability dollar for dollar of the value of the credit. Initially the child tax credit was a nonrefundable credit for most families. A nonrefundable tax credit can only reduce a taxpayer's tax liability to zero, while a refundable tax credit can exceed a taxpayer's tax liability, providing a cash payment to low-income taxpayers who owe little or no tax."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2014-07-28
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American Opportunity Tax Credit: Overview, Analysis, and Policy Options [July 10, 2014]
From the introduction: "The American Opportunity Tax Credit (AOTC) is a temporary tax provision that provides financial assistance to taxpayers whose children (or who themselves) are attending college. The AOTC is scheduled to expire at the end of 2017, at which point Congress may allow the provision to expire, extend the provision in its current form, or extend a modified version of the AOTC. In light of increased congressional interest in reforming the tax code, policy makers may choose to consider modifying the AOTC in conjunction with other education tax benefits. The Joint Committee on Taxation (JCT) estimated that all education tax benefits for individuals cost $46.7 billion in 2014. Higher education tax credits, of which the AOTC is the largest, accounted for $24.5 billion (52%) of the total. This report provides both an in-depth description of this tax credit and an analysis of its economic impact. This report is organized to first provide an overview of the AOTC, followed by a legislative history that highlights the evolution of education tax credits from proposals in the 1960s through the recent extension of the AOTC at the end of 2012. This report then analyzes the credit by looking at who claims the credit, the effect education tax credits have on increasing college attendance, and administrative issues with the AOTC. Finally, this report concludes with a brief overview of various policy options, including tax law changes proposed in Chairman Camp's tax reform bill and in the President's FY2015 budget request."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2014-07-10
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Earned Income Tax Credit (EITC): An Overview [December 3, 2014]
"The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers with relatively low earnings. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. The credit is authorized by Section 32 of the Internal Revenue Code (IRC) and administered as part of the federal income tax system. In 2012, a total of $64.1 billion was claimed by 27.8 million tax filers, making the EITC the largest need-tested anti-poverty cash assistance program. Under current law, the EITC is calculated based on a recipient's earned income, using one of eight different formulas, which vary depending on several factors, including the number of qualifying children a tax filer has (zero, one, two, or three or more) and his or her marital status (unmarried or married). All else being equal, the amount of the credit tends to increase with the number of eligible children the EITC claimant has. Indeed, most of the benefits of the EITC--97% of EITC dollars in 2012--go to families with children. This report provides an overview of the EITC, first discussing eligibility requirements for the credit, followed by how the credit is computed and paid. The report then provides data on the growth of the EITC since it was first enacted in 1975. Finally the report concludes with data on the EITC claimed on 2012 tax returns, examining EITC claims by number of qualifying children, income level, tax filing status, and location of residence."
Library of Congress. Congressional Research Service
Falk, Gene; Crandall-Hollick, Margot L.
2014-12-03
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Potential Federal Tax Implications of 'United States v. Windsor' (Striking Section 3 of the Defense of Marriage Act (DOMA)): Selected Issues [September 9, 2013]
"This report will provide an overview of the potential federal tax implications for same-sex married couples of the U.S. Supreme Court ruling in 'United States v. Windsor', with a focus on the federal income tax. Estate tax issues are also discussed. Importantly, this report focuses on changes in the 'interpretation and administration' of federal tax law resulting from the Court's decision. The decision itself did not amend federal tax law. This report is not intended to address 'all' tax-related issues that may arise as a result of the 'Windsor' decision. Such discussion is beyond the scope of this report."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Sherlock, Molly F.; Pettit, Carol A.
2013-09-09
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Earned Income Tax Credit (EITC): An Overview [April 3, 2014]
"The Earned Income Tax Credit (EITC or EIC) began in 1975 as a temporary program to return a portion of the Social Security tax paid by lower-income taxpayers (the credit was, and remains, calculated as a percentage of earned income, with no direct link to Social Security taxes paid by the tax filer), and was made permanent in 1978. In the 1990s, the program became a major component of federal efforts to reduce poverty, and is now the largest anti-poverty cash entitlement program. Childless adults in 2011 (the latest year for which data are available) received an average EITC of $264, families with one child received an average EITC of $2,199, families with two children received an average EITC of $3,469, and families with three or more children received an average EITC of $3,750. A low-income worker must file an annual income tax return to receive the EITC and meet certain requirements for income and age. A tax filer cannot be a dependent of another tax filer and must be a resident of the United States unless overseas because of military duty. The EITC is based on income and whether the tax filer has a qualifying child. […] Policy issues for the EITC, which reflect either the structure, impact, or administration of the credit, include the work incentive effects of the credit; the marriage penalty for couples filing joint tax returns; the anti-poverty effectiveness of the credit; and compliance. Anti-poverty effectiveness concerns have led to the introduction of legislation and the recent Obama Administration proposal for expanding the EITC for childless adults."
Library of Congress. Congressional Research Service
Scott, Christine A.; Crandall-Hollick, Margot L.
2014-04-03
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Federal Tax Treatment of Married Same-Sex Couples [July 30, 2015]
"This report provides an overview of the federal tax treatment of same-sex married couples, with a focus on the federal income tax. Estate tax issues are also discussed. The administration of federal tax laws for married same-sex couples changed as a result of the U.S. Supreme Court ruling in 'United States v. Windsor' in 2013, striking down Section 3 of the Defense of Marriage Act. The administration of federal tax laws was not affected by the June 26, 2015, ruling in 'Obergefell v. Hodges'. 'Obergefell' struck down state bans on same-sex marriage, holding that all states must both permit same-sex couples to marry in their states and recognize same-sex marriages that were formed in other states. While it did not change the administration of federal income tax laws, the 'Obergefell' decision may affect the number of same-sex couples who decide to marry (and hence the number of federal and state tax returns filed by married couples). Analysis of changes to individuals' state tax liabilities resulting from the 'Obergefell' decision is beyond the scope of this report; however, state tax changes may ultimately affect federal tax liabilities for those couples who itemize deductions on their federal returns. This report focuses on changes in the 'interpretation and administration' of federal tax law resulting from the Court's 'Windsor' decision. The decision itself did not amend federal tax law. This report is not intended to address all tax-related issues that may arise as a result of the federal recognition of same-sex marriages for tax purposes. Such discussion is beyond the scope of this report."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Pettit, Carol A.; Sherlock, Molly F.
2015-07-30
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Individual Taxpayer Identification Number (ITIN) Filers and the Child Tax Credit: Overview and Legislation [March 22, 2016]
"The child tax credit was created by the Taxpayer Relief Act of 1997 (P.L. 105-34) to help ease the financial burden on families when they have children. The credit offsets a taxpayer's federal income tax liability. It also includes a refundable portion, known as the additional child tax credit (ACTC). The ACTC is available to taxpayers with little or no federal income tax liability. In order to claim the child tax credit (including the ACTC), the taxpayer must provide a taxpayer identification number for the taxpayer, his or her spouse if married filing jointly, and any children (a qualifying child must be a U.S. citizen, resident, or national). These identification numbers can be Social Security numbers (SSNs) or individual taxpayer identification numbers (ITINs). SSNs are issued by the Social Security Administration to U.S. citizens and qualifying aliens. ITINs are issued by the Internal Revenue Service (IRS) to aliens who do not have and are not eligible to receive SSNs, including aliens who enter or remain in the United States in violation of federal immigration law. ITINs are issued so that aliens without SSNs have the unique taxpayer identifying number that is necessary to file tax returns, pay taxes, and otherwise comply with federal tax laws. Because the child tax credit (including the ACTC) may be claimed by taxpayers using ITINs, aliens are allowed to claim the credit even if they are in the country in violation of federal immigration law, assuming all other criteria for claiming the credit are met."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Lunder, Erika
2016-03-22
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Tax-Preferred College Savings Plans: An Introduction to 529 Plans [February 23, 2015]
"In the face of the rising cost of higher education, families may consider a variety of ways to finance their children's college expenses. In order to make higher education more affordable, Congress has enacted legislation that provides favorable tax treatment for college savings. Among the options families may choose to save for college, they may consider using tax-advantaged qualified tuition programs (QTPs), also known as 529 plans. This report provides an overview of the mechanics of 529 plans and examines the specific tax advantages of these plans. For an overview of all tax benefits for higher education, see CRS [Congressional Research Service] Report R41967, 'Higher Education Tax Benefits: Brief Overview and Budgetary Effects', by Margot L. Crandall-Hollick."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2015-02-23
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What Share of Taxpayers Would See a Tax Increase or a Tax Decrease Under a Senate Version of the Tax Reform Bill? [December 15, 2017]
"An analysis of the Senate Finance Committee-approved tax reform bill by the Joint Committee on Taxation (JCT) indicates that the legislation would result in some taxpayers paying more in taxes, some paying less in taxes, and some seeing little or no change in their tax liability. JCT's analysis, dated November 27, 2017, was conducted before the Senate passed H.R. 1 with an amendment on December 2, 2017."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2017-12-15
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COVID-19 and Direct Payments to Individuals: Comparison of the Second Round of 'Stimulus Checks' in P.L. 116-260 to the First Round in the CARES Act (P.L. 116-136) [January 13, 2021]
From the Document: "At the end of 2020, lawmakers included a second round of direct payments in the Consolidated Appropriations Act, 2021 (P.L. 116-260). The payments equal $600 per eligible individual ($1,200 for most married couples) plus an additional $600 per eligible child, phasing down for higher-income households. The first round of direct payments was enacted in the CARES [Coronavirus Aid, Relief, and Economic Security] Act (P.L. 116-136) in March 2020. As with the first round of direct payments, the second round of payments are structured as a new one-time refundable credit against 2020 income taxes. Generally, these payments are being automatically issued by the Treasury based on 2019 tax data until January 15, 2021. Eligible households who do not automatically receive a second payment (or who receive less than they would based on their 2020 income and family size) are to generally be able to receive the payment (or receive an additional payment) as a refundable credit when they file their 2020 income tax return. These payments are not taxable and do not count as income or resources for a 12-month period in determining eligibility for, or the amount of assistance provided by, any federally funded public benefit program."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2021-01-13
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COVID-19 and Direct Payments to Individuals: Frequently Asked Questions (FAQs) About the Second Round of 'Stimulus Checks' in P.L. 116-260 [January 13, 2021]
From the Document: "In response to the continued economic weakness from the COVID-19 [coronavirus disease 2019] pandemic, Congress passed a second round of direct payments as part of the Consolidated Appropriations Act, 2021 (P.L. 116-260). The first round of direct payments were included in the CARES [Coronavirus Aid, Relief, and Economic Security] Act (P.L. 116-136). This Insight provides a brief overview of the second round of payments--often referred to as 'stimulus checks.'"
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2021-01-13
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COVID-19 and Direct Payments to Individuals: Comparison of the Second Round of 'Stimulus Checks' in P.L. 116-260 to the First Round in the CARES Act (P.L. 116-136) [Updated January 22, 2021]
From the Document: "At the end of 2020, lawmakers included a second round of direct payments in the Consolidated Appropriations Act, 2021 (P.L. 116-260). The payments equal $600 per eligible individual ($1,200 for most married couples) plus an additional $600 per eligible child, phasing down for higher-income households. The first round of direct payments was enacted in the CARES [Coronavirus Aid, Relief, and Economic Security] Act (P.L. 116-136) in March 2020. As with the first round of direct payments, the second round of payments are structured as a new one-time refundable credit against 2020 income taxes. Generally, these payments are being automatically issued by the Treasury based on 2019 tax data until January 15, 2021. Eligible households who do not automatically receive a second payment (or who receive less than they would based on their 2020 income and family size) are to generally be able to receive the payment (or receive an additional payment) as a refundable credit when they file their 2020 income tax return. These payments are not taxable and do not count as income or resources for a 12-month period in determining eligibility for, or the amount of assistance provided by, any federally funded public benefit program."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2021-01-22
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COVID-19 and Direct Payments to Individuals: Frequently Asked Questions (FAQs) About the Second Round of 'Stimulus Checks' in P.L. 116-260 [Updated January 22, 2021]
From the Document: "In response to the continued economic weakness from the COVID-19 [coronavirus disease 2019] pandemic, Congress passed a second round of direct payments as part of the Consolidated Appropriations Act, 2021 (P.L. 116-260). The first round of direct payments were included in the CARES [Coronavirus Aid, Relief, and Economic Security] Act (P.L. 116-136). This Insight provides a brief overview of the second round of payments--often referred to as 'stimulus checks.'"
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2021-01-22
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COVID-19 and Direct Payments: Summary of the CASH Act (H.R. 9051, 116th Congress) Modifications to 'Stimulus Checks' [January 22, 2021]
From the Document: "At the end of the 116th Congress, the House passed the Caring for Americans with Supplemental Help (CASH) Act (H.R. 9051). The CASH Act would have expanded the second round of stimulus checks enacted as part of the Consolidated Appropriations Act, 2021 (P.L. 116-260) and modified the first round of checks enacted in the CARES [Coronavirus Aid, Relief, and Economic Security] Act (P.L. 116-136) for certain households with older children and adult dependents. The Biden Administration has proposed increasing already enacted stimulus checks in a similar fashion as proposed in the CASH Act. This Insight summarizes how the CASH Act would have expanded and modified already enacted stimulus checks."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.
2021-01-22
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Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act: Division B--Revenue Provisions [May 15, 2020]
From the Document: "Congress continues to consider proposals intended to alleviate the economic effects associated with the Coronavirus Disease 2019, or COVID-19, pandemic. One such proposal, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800), was introduced in the House on May 12, 2020. Division B of the HEROES Act, or the COVID-19 Tax Relief Act of 2020, contains a number of individual and business tax provisions, including [1] a one-time direct payment for eligible individuals, and an expansion of eligibility for the direct payments provided in the CARES [Coronavirus Aid, Relief, and Economic Security] Act; [2] enhanced benefits and/or expanded eligibility for the earned income tax credit (EITC), child tax credit, and child and dependent care tax credit, and suspension of the limitation on the deduction for state and local taxes paid; [3] expansions of tax credits for paid sick leave and paid family leave; [4] tax credits for employers and employees in businesses susceptible to COVID-19- related interruptions; [5] expanded utilization options for certain employee health and dependent care benefits; and [6] a permanent limitation on using noncorporate business losses to offset nonbusiness income, and reduced ability to carry back recent net operating losses."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Sherlock, Molly F.; Driessen, Grant A. . . .
2020-05-15
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Noncitizens and Eligibility for the 2020 Recovery Rebates [May 1, 2020]
From the Document: "Some policymakers have expressed concern that certain individuals, including some immigrants (referred to as noncitizens, foreign nationals, or aliens in law and throughout this Insight), are ineligible for direct payments under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136). The statute refers to these payments as 2020 recovery rebates. The Internal Revenue Service (IRS) refers to these payments issued in 2020 as Economic Impact Payments. [...] There are three main categories of individuals who are ineligible for these payments (not necessarily mutually exclusive): 1. children over 16 years old and adult dependents; 2. certain noncitizens who have individual taxpayer identification numbers (ITINs) or are nonresident aliens; and 3. higher-income taxpayers (generally with income over $99,000 if single, $198,000 if married, with higher thresholds for those with qualifying children). Generally, receipt of these payments in 2020 will be based on individuals' eligibility using information from 2019 (or, if unavailable, 2018). This Insight provides an overview of one category of individuals who are ineligible for the 2020 recovery rebates--certain noncitizens who have ITINs or are nonresident aliens."
Library of Congress. Congressional Research Service
Crandall-Hollick, Margot L.; Kolker, Abigail F.
2020-05-01
