What does Preamble of EITC Modernization Act do?

This bill proposes to amend the Internal Revenue Code of 1986. The proposed amendment aims to extend the earned income tax credit to all taxpayers with dependents. The bill also seeks to extend the earned income tax credit to qualifying students. The bill's purpose is 'to extend the earned income tax credit to all taxpayers with dependents and to qualifying students, and for other purposes.'

What does SHORT TITLE. of EITC Modernization Act do?

This Act is formally titled the EITC Modernization Act.

What does FINDINGS. of EITC Modernization Act do?

This section outlines findings related to the Federal earned income tax credit (EITC). The EITC is described as a refundable tax credit for lower- and middle-income working individuals and families. Since 1975, the EITC has reportedly increased family income, reduced child poverty, and promoted employment. The credit is stated to have a positive impact on the education and health of children living in poverty. The EITC is also said to positively impact local economies and businesses by increasing spending among low- and middle-income workers. The widening income gap between the wealthiest Americans and those of middle- and lower-income Americans is identified as alarming. The text suggests a need to address income inequality through measures like this legislation and raising the Federal minimum wage.

What does MODIFICATIONS OF THE EARNED INCOME TAX CREDIT. of EITC Modernization Act do?

This section modifies the Earned Income Tax Credit (EITC). It redefines 'qualifying child' to 'qualifying dependent' in certain sections of the Internal Revenue Code. New definitions are established for 'qualifying dependent,' 'aged dependent,' and 'qualifying student.' A 'qualifying student' is defined as an eligible student with modified adjusted gross income below 250% of the poverty line or receiving a Pell Grant. A minimum credit of $1,200 is established for qualifying students and individuals with certain qualifying dependents. The section allows eligible individuals to elect to receive EITC payments monthly, with an initial increase in the first payment. A special rule is created for new low-income parents with qualifying children born or adopted in the following year. The age limit for eligible individuals without dependents is lowered from 65 to 18. These amendments apply to taxable years beginning after the enactment of this Act.

What does RETURN PREPARATION PROGRAMS FOR LOW-INCOME TAXPAYERS. of EITC Modernization Act do?

This section establishes a Community Volunteer Income Tax Assistance Matching Grant Program within the Internal Revenue Service. The Secretary may provide matching funds to qualified return preparation programs assisting low-income taxpayers and underserved populations. Grant funds can be used for program operation costs, training, equipment, vehicle expenses, outreach, and financial education services. Applications for grants must demonstrate assistance to low-income taxpayers and focus on underserved populations. The Secretary will conduct periodic site visits to ensure programs are operating effectively and accurately. Programs must maintain a 90% average accuracy rate or provide documentation of corrective measures to be eligible for additional grants. Qualified return preparation programs must assist individuals where at least 90% are low-income taxpayers and use a quality review process reviewing 100% of returns. Eligible organizations include institutions of higher education, non-profit organizations, local government agencies, and coalitions. The Secretary is authorized to award multi-year grants not to exceed 3 years, with a limitation of $30,000,000 per fiscal year. The Secretary will promote tax preparation through qualified programs and may refer taxpayers to these programs.

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EITC Modernization Act

Last updated: 1/31/2025 · Introduced: 1/31/2025

Author: Bonnie Watson Coleman (D-NJ)

TL;DR (AI)

This bill expands the Earned Income Tax Credit (EITC) to include all taxpayers with dependents and qualifying students, defined as those with incomes below 250% of the poverty line or receiving a Pell Grant.
The legislation establishes a minimum EITC credit of $1,200 for qualifying students and individuals with qualifying dependents and allows eligible individuals to elect to receive EITC payments monthly.
The bill creates a grant program within the IRS to provide matching funds to community-based organizations offering free tax preparation services to low-income taxpayers and underserved populations.

119th Congressin committeeOfficial page

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Includes provisions on preamble, short title., and 3 more.

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