Taxation of Minor Children Simplification Act of 2004 - Amends the Internal Revenue Code to revise rules for the taxation of the income of minor children (under age 14). Repeals the allocable parental tax rules. Allows parents to elect to claim the child's gross income and deductions on the parents' tax return.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4135 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4135
To amend the Internal Revenue Code of 1986 to simplify the taxation of
minor children.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 2, 2004
Mr. Houghton 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 simplify the taxation of
minor children.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as ``Taxation of Minor Children Simplifcation
Act of 2004''.
SEC. 2. TAXATION OF MINOR CHILDREN.
(a) Application of Trust Rate Schedule to Net Unearned Income of
Minor Children.--Subsection (g) of section 1 of the Internal Revenue
Code of 1986 (relating to certain unearned income of minor children
taxed as if parent's income) is amended--
(1) by striking paragraphs (1), (3), and (5),
(2) by redesignating paragraphs (4), (6), and (7) as
paragraphs (3), (4), and (5), respectively, and
(3) by inserting before paragraph (2) the following new
paragraph:
``(1) In general.--In the case of a child to whom this
subsection applies, the tax imposed by this section shall be
the sum of--
``(A) a tax computed at the rates and in the same
manner as if this subsection had not been enacted on
taxable income reduced by net unearned income, plus
``(B) the excess (if any) of the tax determined
under subsection (e) on total taxable income over the
tax determined under subsection (e) on taxable income
reduced by net unearned income.''.
(b) Expansion of Parental Election.--Paragraph (5) of section 1(g)
of such Code (as redesignated under subsection (a)) is amended to read
as follows:
``(5) Election to claim income of child on parent's
return.--
``(A) In general.--If the parent of any child to
whom this subsection applies elects the application of
subparagraph (B), such child--
``(i) shall be treated (other than for
purposes of this paragraph)--
``(I) as having no gross income for
such year, and
``(II) as not being entitled to any
deductions or credits for such year,
and
``(ii) shall not be required to file a
return under section 6012 for such year.
``(B) Income included on parent's return.--In the
case of a parent making the election under this
paragraph--
``(i) the gross income of each child to
whom such election applies shall be included in
such parent's gross income for the taxable
year,
``(ii) the deductions to which such child
would be entitled without regard to such
election shall be allowed to such parent but
only to the extent the aggregate of such
deductions does not exceed the gross income of
such child,
``(iii) any estimated tax payment, and any
amount which has been deducted and withheld
under chapter 24, for such year that is made in
the name and TIN of such child shall be treated
as an estimated tax payment or as an amount
deducted and withheld in the name and TIN of
such parent for such year (including for
purposes of section 31), and
``(iv) any interest which is an item of tax
preference under section 57(a)(5) of the child
shall be treated as an item of tax preference
of such parent (and not of such child).
``(C) Special rule for determining which parent may
make election.--For purposes of this paragraph, the
parent of a child to whom this subsection applies who
may make an election under this paragraph shall be--
``(i) in the case of parents who are not
married (within the meaning of section 7703),
the custodial parent (within the meaning of
section 152(e)) of the child, and
``(ii) in the case of married individuals
filing separately, the individual with the
greater taxable income.
``(D) Carryovers allowed.--Subparagraph (A)(i)(II)
shall not prohibit the carryover of any amount that the
child would be entitled to carryover without regard to
the election under this paragraph.
``(E) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this paragraph.''.
(c) Conforming Amendment.--The heading for subsection (g) of
section 1 of such Code is amended to read as follows:
``(g) Treatment of Certain Income of Minor Children.--''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E518)
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line