Repeal of credit for expenses for household and dependent care services

(a) In general Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking section 21. (b) Conforming amendments (1) Section 23(f)(1) of the Internal Revenue Code of 1986 is amended to read as follows: (1) Rules for married couples (A) Married couples must file joint return If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and his spouse file a joint return for the taxable year. (B) Marital status An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married. (C) Certain married individuals living apart If— (i) an individual who is married and who files a separate return— (I) maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and (II) furnishes over half of the cost of maintaining such household during the taxable year, and (ii) during the last 6 months of such taxable year such individual's spouse is not a member of such household, such individual shall not be considered as married.. (2) Section 35(g)(6) of such Code is amended to read as follows: (6) Marital status; certain married individuals living apart Rules similar to the rules of subparagraphs (B) and (C) of section 23(f)(1) shall apply for purposes of this section.. (3) Section 129(a)(2)(C) of such Code is amended to read as follows: (C) Marital status For purposes of this paragraph, marital status shall be determined under the rules of subparagraphs (B) and (C) of section 23(f)(1).. (4) Section 129(b)(2) of such Code is amended to read as follows: (2) Special rules for spouse who is a student or incapable of caring for self In the case of a spouse who is a student or an individual described in subsection (e)(1)(B)(ii)(III) (determined without regard to the amount of time spent in the taxpayer's household), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is an individual so described in subsection (e)(1)(B)(ii)(III), to be gainfully employed and to have earned income of not less than— (A) $250 if there is 1 individual described in subclauses (I) through (III) of subsection (e)(1)(B) with respect to the taxpayer for the taxable year, or (B) $500 if there are 2 or more such individuals with respect to the taxpayer for the taxable year. In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any month.. (5) Section 129(e)(1) of such Code is amended— (A) by striking The term and inserting the following: (A) In general The term, (B) by striking under section 21(b)(2) (relating to expenses for household and dependent care services necessary for gainful employment), and (C) by adding at the end the following: (B) Employment-related expenses (i) In general The term employment-related expenses means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the taxpayer: (I) Expenses for household services, and (II) Expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight. (ii) Exception Employment-related expenses described in clause (i) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of— (I) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13, (II) a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)) who is physically or mentally incapable of caring for himself or herself, who has the same principal place of abode as the taxpayer for more than one-half of such taxable year, and who regularly spends at least 8 hours each day in the taxpayer's household, or (III) the spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for himself or herself, has the same principal place of abode as the taxpayer for more than one-half of such taxable year, and regularly spends at least 8 hours each day in the taxpayer's household. (iii) Dependent Care Centers Employment-related expenses described in clause (i) which are incurred for services provided outside the taxpayer's household by a dependent care center shall be taken into account only if— (I) such center complies with all applicable laws and regulations of a State or unit of local government, and (II) The requirements of clause (ii) are met. (iv) Dependent Care Center Defined For purposes of this paragraph, the term dependent care center means any facility which— (I) provides care for more than six individuals (other than individuals who reside at the facility), and (II) receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).. (6) Section 213 of such Code is amended by striking subsection (e). (7) Section 6213(g)(2) of such Code is amended— (A) in subparagraph (H), by striking section 21 (relating to expenses for household and dependent care services necessary for gainful employment) or, and (B) in subparagraph (L), by striking 21,. (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.