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1 (January 6, 2004)

handle is hein.crs/crsuntaahbe0001 and id is 1 raw text is: Order Code RS21466 Updated January 6, 2004 CRS Report for Congress Received through the CRS Web Dependent Care: Current Tax Benefits and Legislative Issues Christine Scott Specialist in Tax Economics Domestic Social Policy Division Summary In the 2000 census, for over 60% of the households with children under 6, all parents in the household worked. For families with both parents working or a single working parent family, care for young children and individuals who are physically or mentally unable to care for themselves is critical to maintaining participation in the workforce. To assist these families current law provides two tax benefits related to dependent care: the dependent care credit and the exclusion from income for employer- provided dependent care assistance programs. Both provisions are for employment- related expenses for the care of dependents under the age of 13, or dependents (or a spouse) who are physically or mentally incapable of caring for themselves. Legislation has been introduced in the 108th Congress that would clarify the tax treatment of dependent care programs for military personnel (H.R. 878, H.R. 1307, H.R. 1664, H.R. 3365, S. 19, S. 235, S. 289, and S. 351). H.R. 3365 passed both houses and was signed into law (P.L. 108-121) on November 11, 2003. Other legislation introduced in the 108th Congress would eliminate the 2010 sunset for the dependent care provisions of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA, P.L. 107-16) (H.R. 210, H.R. 407, H.R. 493, H.R. 1612, and S. 96): make the credit refundable (H.R. 493); expand the credit (H.R. 181, H.R. 936, H.R. 3666, S. 388, S. 448, and S. 1253); simplify the calculation of the credit (H.R. 22); or provide a uniform definition of a child (H.R. 22, H.R. 936, H.R. 2392, H.R. 2718, S. 448, S. 755, S. 1173, S. 1174, and S. 1434). This report will be updated as legislative activity warrants. Current Tax Benefits for Dependent Care There are two current law tax provisions for dependent care: the dependent care tax credit (DCTC) and the exclusion from income for employer-provided dependent care assistance programs (DCAP). Both provisions use the same definitions of qualified employment related expenses and qualifying dependents. Congressional Research Service + The Library of Congress

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