I
119THCONGRESS
1
STSESSION H. R. 2438
To amend the Internal Revenue Code of 1986 to create a refundable tax
credit for foster families, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH27, 2025
Mrs. H
OUCHIN(for herself and Ms. JOHNSONof Texas) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Education and Workforce, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To amend the Internal Revenue Code of 1986 to create
a refundable tax credit for foster families, and for other
purposes.
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 ‘‘Foster Care Tax Cred-4
it Act’’. 5
SEC. 2. FOSTER CARE TAX CREDIT. 6
(a) A
LLOWANCE OFCREDIT.— 7
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(1) IN GENERAL.—Subpart C of part IV of sub-1
chapter A of chapter 1 of the Internal Revenue Code 2
of 1986 is amended by inserting after section 36B 3
the following new section: 4
‘‘SEC. 36C. FOSTER CARE TAX CREDIT. 5
‘‘(a) A
LLOWANCE OFCREDIT.—In the case of an eli-6
gible taxpayer, there shall be allowed as a credit against 7
the tax imposed by this chapter for the taxable year an 8
amount equal to $850. 9
‘‘(b) L
IMITATION.— 10
‘‘(1) I
N GENERAL.—The amount of the credit 11
allowable under subsection (a) (determined without 12
regard to this subsection) shall be reduced (but not 13
below zero) by the amount which bears the same 14
ratio to such credit (as so determined) as— 15
‘‘(A) the excess of— 16
‘‘(i) the taxpayer’s modified adjusted 17
gross income for such taxable year, over 18
‘‘(ii) the threshold amount, bears to 19
‘‘(B) $17,000. 20
‘‘(2) T
HRESHOLD AMOUNT .—For purposes of 21
paragraph (1), the term ‘threshold amount’ means— 22
‘‘(A) $250,000, in the case of a joint re-23
turn, 24
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‘‘(B) $150,000, in the case of an individual 1
who is not married, and 2
‘‘(C) $125,000, in the case of a married 3
individual filing a separate return. 4
For purposes of this paragraph, marital status shall 5
be determined under section 7703. 6
‘‘(3) M
ODIFIED ADJUSTED GROSS INCOME .— 7
For purposes of this subsection, the term ‘modified 8
adjusted gross income’ means the adjusted gross in-9
come of the taxpayer for the taxable year increased 10
by any amount excluded from gross income under 11
section 911, 931, or 933. 12
‘‘(c) E
LIGIBLETAXPAYER.—For purposes of this sec-13
tion— 14
‘‘(1) I
N GENERAL.—The term ‘eligible taxpayer’ 15
means, with respect to any taxable year, any tax-16
payer— 17
‘‘(A) with whom a qualifying foster child 18
was placed for a period of not less than 1 19
month during such taxable year, and 20
‘‘(B) for whom a credit under section 24 21
with respect to such eligible foster child is not 22
allowed for such taxable year. 23
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‘‘(2) QUALIFYING FOSTER CHILD .—The term 1
‘qualifying foster child’ means an eligible foster child 2
(within the meaning of section 152(f)(1)(C))— 3
‘‘(A) who has not attained age 17, and 4
‘‘(B) who is a citizen, national, or resident 5
of the United States. 6
‘‘(3) C
ALENDAR MONTH .—For purposes of this 7
paragraph (1)(A), if a foster child resides in the 8
home of the taxpayer for more than 15 consecutive 9
days of a calendar month but fewer than the total 10
number of days in such calendar month, such foster 11
child shall be treated as residing in the home of the 12
taxpayer for the full calendar month. 13
‘‘(d) R
ESTRICTIONS ONTAXPAYERSWHOIMPROP-14
ERLYCLAIMEDCREDIT INPRIORYEAR.— 15
‘‘(1) T
AXPAYERS MAKING PRIOR FRAUDULENT 16
OR RECKLESS CLAIMS.— 17
‘‘(A) I
N GENERAL.—No credit shall be al-18
lowed under this section for any taxable year in 19
the disallowance period. 20
‘‘(B) D
ISALLOWANCE PERIOD .—For pur-21
poses of subparagraph (A), the disallowance pe-22
riod is— 23
‘‘(i) the period of 10 taxable years 24
after the most recent taxable year for 25
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which there was a final determination that 1
the taxpayer’s claim of credit under this 2
section was due to fraud, and 3
‘‘(ii) the period of 2 taxable years 4
after the most recent taxable year for 5
which there was a final determination that 6
the taxpayer’s claim of credit under this 7
section was due to reckless or intentional 8
disregard of rules and regulations (but not 9
due to fraud). 10
‘‘(2) T
AXPAYERS MAKING IMPROPER PRIOR 11
CLAIMS.—In the case of a taxpayer who is denied 12
credit under this section for any taxable year as a 13
result of the deficiency procedures under subchapter 14
B of chapter 63, no credit shall be allowed under 15
this section for any subsequent taxable year unless 16
the taxpayer provides such information as the Sec-17
retary may require to demonstrate eligibility for 18
such credit.’’. 19
(2) C
ONFORMING AMENDMENTS .— 20
(A) Section 6211(b)(4) of the Internal 21
Revenue Code of 1986 is amended by inserting 22
‘‘36C,’’ after ‘‘36B,’’. 23
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(B) Section 1324(b)(2) of title 31, United 1
States Code, is amended by inserting ‘‘25E,’’ 2
after ‘‘25A,’’. 3
(C) The table of sections for subpart C of 4
part IV of subchapter A of chapter 1 of the In-5
ternal Revenue Code of 1986 is amended by in-6
serting after the item relating to section 36B 7
the following new item: 8
‘‘Sec. 36C. Foster care tax credit.’’.
(b) INFORMATIONRETURNSRELATING TOFOSTER 9
C
HILDPLACEMENT.— 10
(1) I
N GENERAL.—Subpart A of part III of 11
subchapter A of chapter 61 of the Internal Revenue 12
Code of 1986 is amended by inserting after section 13
6039J the following new section: 14
‘‘SEC. 6039K. INFORMATION REPORTING WITH RESPECT TO 15
FOSTER CHILD PLACEMENT. 16
‘‘(a) I
NGENERAL.—Every authorized placement 17
agency and court which places a qualifying foster child 18
with a person during a calendar year shall, at such time 19
as the Secretary shall prescribe, make a return described 20
in subsection (b). 21
‘‘(b) F
ORM ANDMANNER OFRETURN.—A return is 22
described in this subsection if such return— 23
‘‘(1) is in such form as the Secretary may pre-24
scribe, and 25
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‘‘(2) contains, with respect to each qualifying 1
foster child placed during the calendar year— 2
‘‘(A) the name, address, and TIN of each 3
individual with whom such qualifying foster 4
child was placed, 5
‘‘(B) the name of the qualifying foster 6
child, and 7
‘‘(C) the dates during which such place-8
ment occurred. 9
‘‘(c) S
TATEMENTSTOBEFURNISHED TOFOSTER 10
P
ARENTS.— 11
‘‘(1) I
N GENERAL.—Every person required to 12
make a return under subsection (a) shall furnish to 13
each individual whose name is required to be set 14
forth under subsection (b)(2)(A) a written statement 15
showing— 16
‘‘(A) the name and address of the person 17
required to make such return and the phone 18
number of the information contact for such per-19
son, and 20
‘‘(B) the information required to be shown 21
on the return with respect to such individual. 22
‘‘(2) T
IME FOR FURNISHING STATEMENTS .— 23
The written statement required under paragraph (1) 24
shall be furnished on or before January 31 of the 25
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year following the calendar year for which the return 1
under subsection (a) was required to be made. 2
‘‘(d) Q
UALIFYINGFOSTERCHILD.—For purposes of 3
this section, the term ‘qualifying foster child’ has the 4
meaning given such term under section 36C(c)(2).’’. 5
(2) A
SSESSABLE PENALTIES.— 6
(A) Section 6724(d)(1)(B) of such Code is 7
amended by striking ‘‘or’’ at the end of clause 8
(xxv), by striking ‘‘and’’ at the end of clause 9
(xxvi) and inserting ‘‘or’’, and by inserting after 10
clause (xxvi) the following new clause: 11
‘‘(xxvii) section 6039K (relating to in-12
formation returns with respect to foster 13
child placement),’’. 14
(B) Section 6724(d)(2) of such Code is 15
amended by redesignating the second subpara-16
graph (JJ) as subparagraph (KK), by striking 17
‘‘or’’ at the end of subparagraph (II), by strik-18
ing the period at the end of the first subpara-19
graph (JJ), by striking the period at the end of 20
subparagraph (KK) (as so redesignated) and 21
inserting a comma, and by inserting after such 22
subparagraph (KK) the following new subpara-23
graph: 24
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‘‘(LL) section 6039K(c) (relating to state-1
ments with respect to foster child placement).’’. 2
(3) C
LERICAL AMENDMENT .—The table of sec-3
tions of subpart A of part III of subchapter A of 4
chapter 61 of such Code is amended by inserting 5
after the item relating to section 6039J the fol-6
lowing new item: 7
‘‘Sec. 6039K. Information reporting with respect to foster child placement.’’.
(c) ELECTIONNOTTOTAKECHILDTAXCREDIT.— 8
Section 24(h)(4) of the Internal Revenue Code of 1986 9
is amended by adding at the end the following new sub-10
paragraph: 11
‘‘(D) E
LECTION NOT TO TAKE CREDIT .— 12
A taxpayer may elect not to have this para-13
graph apply with respect to any dependent of 14
the taxpayer to whom a credit would otherwise 15
be allowed by reason of subparagraph (A). In 16
any case in which a taxpayer makes an election 17
under this subparagraph, the credit allowed 18
under this section shall be treated as not al-19
lowed with respect to such dependent.’’. 20
(d) A
PPLICATION OFTAXRETURNPREPARERDUE 21
D
ILIGENCEPENALTY.—Section 6695(g) of the Internal 22
Revenue Code of 1986 is amended by striking ‘‘or 32’’ 23
and inserting ‘‘32, or 36C’’. 24
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(e) EFFECTIVEDATE.—The amendments made by 1
this section shall apply to calendar months beginning after 2
December 31, 2024, in taxable years beginning after such 3
date. 4
(f) E
DUCATION.— 5
(1) I
N GENERAL.—The Secretary of Health and 6
Human Services (or the Secretary’s delegate), in co-7
ordination with the Secretary of the Treasury or 8
such Secretary’s delegate, shall identify provisions in 9
the Internal Revenue Code of 1986 that can be used 10
by or can benefit foster families, and shall increase 11
outreach efforts to provide information and edu-12
cational materials regarding such provisions to State 13
and Indian tribal foster care agencies and to foster 14
families. 15
(2) A
UTHORIZATION OF APPROPRIATIONS .— 16
There are authorized to be appropriated such sums 17
as necessary for the purposes of carrying out para-18
graph (1). 19
SEC. 3. STUDY AND REPORT ON EMERGENCY AND SHORT- 20
TERM FOSTER PLACEMENTS. 21
(a) S
TUDY.—The Secretary of Health and Human 22
services, in coordination with the Secretary of the Treas-23
ury (or the Secretary’s delegate), shall conduct a study 24
on— 25
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(1) the costs and financial burdens on foster 1
families who experience multiple emergency and 2
short-term foster placements annually; and 3
(2) challenges to verifying and documenting the 4
placement of children in emergency and short-term 5
placement. 6
For purposes of this subsection, a short-term placement 7
is a placement that lasts less than 1 week. 8
(b) R
EPORT.—Not later than 1 year after the date 9
of the enactment of this Act, the Secretary of Health and 10
Human Services shall submit to Congress a report on the 11
study conducted under subsection (a). 12
Æ
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