Overview
Title
To amend the Internal Revenue Code of 1986 to exclude certain dependent income when calculating modified adjusted gross income for the purposes of eligibility for premium tax credits.
ELI5 AI
The bill wants to change the rules so some money that kids and young people earn doesn't count when their family is checking if they can get a special kind of help to pay for health insurance. This means if young people earn money, it might not stop their family from getting help to pay for health insurance.
Summary AI
The bill H.R. 9831, known as the “Dependent Income Exclusion Act of 2024,” aims to amend the Internal Revenue Code to adjust how dependent income is considered when calculating eligibility for premium tax credits. Specifically, it proposes excluding certain wages or self-employment earnings of dependents under 18, or under 24 if they are part-time students, job-training, or apprenticeship participants. Additionally, this exclusion would have a limit, not applying to excess income beyond 15% of the taxpayer's modified adjusted gross income. The bill also considers provisions for taxpayers in states without expanded Medicaid eligibility, ensuring it does not reduce household income below 100% of the poverty line.
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AnalysisAI
General Summary of the Bill
The proposed legislation, known as the Dependent Income Exclusion Act of 2024, aims to modify the Internal Revenue Code of 1986. It seeks to adjust how certain dependent incomes are considered when calculating a taxpayer's eligibility for premium tax credits. Specifically, it proposes excluding certain wages and earnings of dependents who are under the age of 18 or, in some cases, under the age of 24, from the modified adjusted gross income (MAGI) calculations. The goal is to ensure that dependent income does not unjustly disqualify families from receiving premium tax credits under the Affordable Care Act (ACA).
Summary of Significant Issues
Several significant issues arise from the complexities embedded within the bill. The language used in drafting Section 2 is intricate and references multiple other legislative texts, which may pose a comprehension challenge for taxpayers. Furthermore, the provision lays out specific conditions for exception, based on age and engagement in educational or vocational programs, which could complicate enforcement. Notably, there is an explicit distinction for taxpayers in Medicaid non-expansion states that introduces variable rules, potentially favoring certain taxpayers over others due to their residency.
Additionally, the bill imposes a limitation that caps the excluded dependent income to 15 percent of the taxpayer’s MAGI. This requirement necessitates precise calculations, which could be burdensome for taxpayers without professional guidance. The definition of a 'qualified job-training program’ lacks detail, relying on another legislative act, leading to potential discrepancies in its interpretation. Lastly, no directives are provided regarding how the IRS or other agencies will communicate and enforce these changes, potentially leading to operational challenges.
Impact on the Public
Broadly, this bill could ease the tax burden on families with dependent children whose earnings have previously affected their premium tax credit eligibility. By excluding certain dependent incomes, more families may qualify for financial assistance under the ACA, improving their access to affordable health care. However, the intricate rules and calculations involved may require families to seek professional tax assistance, potentially increasing their costs. Additionally, the administrative burden on government agencies to implement these changes effectively could influence the success of this legislation's intended impacts.
Impact on Specific Stakeholders
For families with young dependents entering the workforce, this bill has the potential for positive financial implications, as it may enable higher qualification for premium tax credits. On the other hand, families residing in Medicaid non-expansion states could perceive the adjustment to ensure income does not fall below the poverty line as beneficial, preventing undue financial hardship.
Tax professionals and consultants might experience increased demand for their services due to the complex nature of the bill, which could be viewed as both an opportunity and a challenge in terms of workload. Conversely, taxpayers without access to such resources may find the requirements daunting, leading to potential underutilization of available benefits.
Ultimately, while the bill seeks to increase fairness in income calculations for tax credits, the accompanying complexities could present obstacles to its effective implementation and equitable application across different demographics and locations.
Issues
The language in Section 2 regarding exclusions of certain dependent income is complex and may be difficult for the average taxpayer to understand, particularly with the references to other legislative texts. This could affect taxpayers' ability to accurately determine their modified adjusted gross income and eligibility for premium tax credits.
The conditions for exceptions based on age (18 or 24) and circumstances such as job-training or apprenticeship participation in Section 2 are complicated and may be difficult to verify and enforce. This complexity could lead to confusion and inconsistent application of the law.
The bill introduces a stipulation in Section 2 that applies different rules for taxpayers residing in Medicaid non-expansion states. While it aims to prevent income reductions below the poverty line, it could be perceived as favoring taxpayers in certain states over others, potentially leading to legal or political challenges.
The Section 2 provision limiting dependent income exclusion to 15 percent of the taxpayer's modified adjusted gross income requires detailed calculation and documentation, which may impose an additional burden on taxpayers. This requirement might not be feasible for all taxpayers, particularly those without access to professional tax assistance.
Section 2's definition of a 'qualified job-training program' is reliant on reference to another legislative act, which might cause varying interpretations and uncertainty among taxpayers and tax professionals.
The bill lacks guidance in Section 2 on how these amendments will be communicated and implemented by the IRS or other agencies. Without clear communication strategies, there could be discrepancies and challenges during enactment, impacting taxpayers' understanding and compliance.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The Dependent Income Exclusion Act of 2024 is the official name for the legislation discussed in Section 1.
2. Exclusion of certain dependent income for purposes of premium tax credit Read Opens in new tab
Summary AI
The section amends the Internal Revenue Code to exclude certain income earned by dependents from being counted toward a taxpayer's premium tax credit eligibility. Specifically, it does not count wages of dependents under 18 or those under 24 if they are studying part-time or full-time, in job-training or apprenticeship programs, with certain limitations, such as capping the amount excluded to 15% of the taxpayer's modified adjusted gross income.