Youth Tax Fairness Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4728 To amend the Internal Revenue Code of 1986 to modify the taxation of unearned income of certain children. IN THE HOUSE OF REPRESENTATIVES OCTOBER 17, 2019 Ms. MOORE (for herself, Mr. ESTES, Mr. CISNEROS, Mr. YOUNG, Mr. PA- NETTA, Mr. COLE, Mr. KILDEE, Mr. CALVERT, Ms. DAVIDS of Kansas, Mr. STEUBE, and Ms. HAALAND) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to modify the taxation of unearned income of certain children. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Youth Tax Fairness 4 Act of 2019’’. 5 SEC. 2. MODIFICATION OF TAXATION OF UNEARNED IN- 6 COME OF CERTAIN CHILDREN. 7 (a) CERTAIN INCOME TREATED AS EARNED INCOME 8 FOR PURPOSES OF KIDDIE TAX.—Section 1(g)(4)(C) of 9 VerDate Sep 11 2014 18:16 Oct 23, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4728.IH H4728 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4728 IH the Internal Revenue Code of 1986 is amended to read 1 as follows: 2 ‘‘(C) TREATMENT OF CERTAIN AMOUNTS 3 AS EARNED INCOME.—For purposes of this sub- 4 section, each of following amounts shall be 5 treated as earned income of the child referred 6 to in paragraph (1) to the extent included in 7 the gross income of such child: 8 ‘‘(i) DISTRIBUTIONS FROM QUALIFIED 9 DISABILITY TRUSTS.—Any amount in- 10 cluded in the gross income of such child 11 under section 652 or 662 by reason of 12 being a beneficiary of a qualified disability 13 trust (as defined in section 14 642(b)(2)(C)(ii)). 15 ‘‘(ii) CERTAIN MILITARY SURVIVOR 16 BENEFITS.—Any benefit under laws ad- 17 ministered by the Secretary of Defense or 18 the Secretary of Veterans Affairs which is 19 received by such child by reason of the 20 child being the survivor of a deceased 21 member of the Armed Forces or of a de- 22 ceased veteran. 23 ‘‘(iii) CERTAIN FIRST RESPONDER 24 SURVIVOR BENEFITS.—Any payment made 25 VerDate Sep 11 2014 18:16 Oct 23, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4728.IH H4728 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4728 IH by Federal, State, or local government to 1 such child if such payment is made by rea- 2 son of the death of the parent of such child 3 during such parent’s service as a law en- 4 forcement officer, firefighter, paramedic, or 5 emergency medical technician. 6 ‘‘(iv) CERTAIN INDIAN TRIBAL PAY- 7 MENTS.—Any payment made by an Indian 8 tribal government (as defined in section 9 139E(c)(1)), or from a trust of which the 10 Indian tribal government is treated as the 11 owner under subpart E of part I of sub- 12 chapter J, to such child if— 13 ‘‘(I) such child is an enrolled 14 member of the tribe with respect to 15 such Indian tribal government, and 16 ‘‘(II) such payment is received by 17 such child by reason of such enroll- 18 ment. 19 ‘‘(v) CERTAIN SCHOLARSHIPS OR FEL- 20 LOWSHIP GRANTS.—Any scholarship or fel- 21 lowship grant which is received by such 22 child if— 23 ‘‘(I) such child is a candidate for 24 a degree at an educational organiza- 25 VerDate Sep 11 2014 18:16 Oct 23, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4728.IH H4728 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4728 IH tion described in section 1 170(b)(1)(A)(ii), and 2 ‘‘(II) such scholarship or grant 3 supports such candidacy. 4 ‘‘(vi) ALASKA PERMANENT FUND 5 DIVIDENDS.—Any Alaska Permanent Fund 6 dividend. 7 ‘‘(vii) SOCIAL SECURITY BENEFITS.— 8 Any social security benefit (as defined in 9 section 86(d)).’’. 10 (b) REPEAL OF TEMPORARY RULE FOR TAXATION 11 OF UNEARNED INCOME OF CERTAIN CHILDREN.—Section 12 1(j) of such Code is amended by striking paragraph (4). 13 (c) APPLICATION TO ALTERNATIVE MINIMUM TAX.— 14 (1) IN GENERAL.—Section 59(j)(1)(A) of such 15 Code is amended by inserting ‘‘and including 16 amounts treated as earned income under section 17 1(g)(4)(C)’’ after ‘‘section 911(d)(2)’’. 18 (2) SUSPENSION OF KIDDIE TAX LIMITATION 19 ON ALTERNATIVE MINIMUM TAX EXEMPTION DUR- 20 ING PERIOD OF INCREASED EXEMPTION.—Section 21 55(d)(4)(A) of such Code is amended by striking 22 ‘‘and’’ at the end of clause (i)(II), by striking the 23 period at the end of clause (ii)(III) and inserting ‘‘, 24 VerDate Sep 11 2014 18:16 Oct 23, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4728.IH H4728 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 4728 IH and’’, and by adding at the end the following new 1 clause: 2 ‘‘(iii) subsection (j) of section 59 shall 3 not apply.’’. 4 (d) EFFECTIVE DATES.— 5 (1) IN GENERAL.—Except as otherwise pro- 6 vided in this subsection, the amendments made by 7 this section shall apply to taxable years beginning 8 after December 31, 2017. 9 (2) REPEAL OF TEMPORARY RULE FOR TAX- 10 ATION OF UNEARNED INCOME OF CERTAIN CHIL- 11 DREN.— 12 (A) IN GENERAL.—Except as provided in 13 subparagraph (B), the amendment made by 14 subsection (b) shall apply to taxable years be- 15 ginning after December 31, 2018. 16 (B) ELECTIVE RETROACTIVE APPLICA- 17 TION.—In the case of a taxpayer who elects the 18 application of this subparagraph (at such time 19 and in such manner as the Secretary of the 20 Treasury (or the Secretary’s designee) may pro- 21 vide), the amendment made by subsection (b) 22 shall apply to taxable years beginning after De- 23 cember 31, 2017. 24 Æ VerDate Sep 11 2014 18:16 Oct 23, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H4728.IH H4728 pamtmann on DSKBC07HB2PROD with BILLS