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Public Law (10/04/2004)

(This measure has not been amended since the Conference Report was filed in the House on September 23, 2004. The summary of that version is repeated here.)

Working Families Tax Relief Act of 2004 - Title I: Extension of Family Tax Provisions - Amends the Internal Revenue Code (Code) to repeal: (1) the scheduled reductions, in 2005 through 2009, of the $1,000 child tax credit; (2) the scheduled reductions, in 2005 through 2008, of the standard deduction for married taxpayers; (3) the scheduled reductions, in 2005 through 2007, of the threshold taxable income level applicable to married taxpayers eligible for the 15 percent tax bracket; (4) the reduction, for taxable years between 2005 and 2008, of the threshold taxable income level applicable to married taxpayers eligible for the ten percent tax bracket. Provides for an inflation adjustment to the threshold taxable income level for the ten percent tax bracket.

(Sec. 102) Repeals the scheduled reduction (15 to 10 percent) for taxable years beginning before January 1, 2005, of the refundability of the child tax credit.

(Sec. 103) Extends through 2005 the increased exemption from the alternative minimum tax for individual taxpayers.

(Sec. 104) Treats combat zone compensation (otherwise excludable from gross income) as earned income for purposes of calculating the refundable portion of the child tax credit. Allows taxpayers to elect, in 2004 and 2005, to treat combat zone compensation as earned income for purposes of the earned income tax credit.

(Sec. 105) Provides that the amendments made by this title shall be subject to the sunset provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (i.e., December 31, 2010).

Title II: Uniform Definition of Child - Redefines "dependent" to mean: (1) a qualifying child; or (2) a qualifying relative, for purposes of applying the dependency exemption, the child tax credit, the earned income tax credit, the dependent care tax credit, and the head of household filing status. Sets forth a test for determining whether a child is a qualifying child based upon: (1) relationship of the child to the taxpayer; (2) residence of the child with the taxpayer for for more than one-half of the taxable year; and (3) age of the child. Sets forth a similar test for qualifying relatives.

Sets forth exceptions and special rules applicable to: (1) handicapped dependents; (2) divorced parents; (3) adopted children; and (4) missing children.

Title III: Extensions of Certain Expiring Provisions - Extends through 2005 the following expiring tax provisions: (1) the tax credit for increasing research activities; (2) the work opportunity tax credit; (3) the welfare-to-work tax credit; (4) the authority for issuance of qualified zone academy bonds; (5) the charitable deduction for donations by corporations of computer technology and equipment used for educational purposes; (6) the tax deduction for certain expenses of elementary and secondary school teachers; (7) the expensing of environmental remediation costs; (8) the designation of a District of Columbia enterprise zone, the authority to issue tax-exempt economic development bonds within a District of Columbia Enterprise Zone, the exclusion of gain from the sale or exchange of a District of Columbia Enterprise Zone asset held for more than five years, and the tax credit for first-time District of Columbia home buyers; (9) the authority for disclosures of taxpayer identity information to States under the combined Federal and State employment tax reporting program; (10) the allowance of certain nonrefundable tax credits against income and alternative minimum tax liabilities; (11) the placed-in-service dates relating to certain facilities (i.e., wind, closed-loop biomass, and poultry waste facilities) for purposes of the tax credit for producing electricity from certain renewable resources; (12) the suspension of the taxable income limit on percentage depletion for oil and natural gas from marginal properties; (13) the Indian employment tax credit; (14) accelerated depreciation for certain business property on Indian Reservations; (15) the authority for disclosing certain tax return information to the Department of Education for taxpayers seeking student loan repayment plans based on income; (16) the authority of the Secretary of the Treasury to disclose taxpayer return information that may be related to terrorism. Specifies that a taxpayer's identity shall not be treated as nondisclosable taxpayer return information for purposes of disclosures related to terrorism; (17) certain eligibility provisions for Archer medical savings (MSA) accounts. Treats the report of the MSA Trustee due on August 1, 2004, as timely if made before the close of the 90-day period beginning on the date of enactment of this Act.

(Sec. 302) Extends through December 31, 2005, provisions of the Code, the Employee Retirement Income Security Act of 1974 (ERISA), and the Public Health Service Act requiring parity in the application of group health plan limits to mental health benefits.

(Sec. 305) Extends until January 1, 2006, the increased amount ($13.25, instead of $10.50) of excise tax on distilled spirits required to be paid back (covered) to the Treasuries of Puerto Rico and the Virgin Islands.

(Sec. 309) Extends through 2009 the authority to issue New York Liberty Bonds and, through 2005, advanced refundings for such bonds.

(Sec. 318) Eliminates, in 2004 and 2005, the partial phase-out of the tax credit for qualified electric vehicles and the partial phase-out for the tax deduction for clean-fuel vehicle property.

(Sec. 321) Extends for an additional year (before June 1, 2005) the annual review and report of the Joint Committee on Taxation of the strategic plans and budget for the Internal Revenue Service.

Title IV: Tax Technical Corrections - (Sec. 401) Amends provisions of the Code enacted by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to exclude: (1) the additional tax on distributions from health savings accounts not used for qualified medical expenses from the definition of regular tax liability for purposes of determining refundability of tax credit amounts; and (2) amounts distributed from health savings accounts for purposes of determining the allowable amount of the tax credit for health insurance costs.

(Sec. 402) Amends provisions of the Code enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003 to: (1) provide that the determination of net capital gains, for purposes of determining the amount taxed at the 25 percent tax rate, is made without regard to qualified dividend income; (2) modify holding period requirements for the dividends-received deduction; (3) apply the tax deduction for estate taxes on income in respect of a decedent to qualified dividend income; (4) apply the extraordinary dividend rule to trust and estates; (5) revise provisions relating to the tax treatment of dividends received from a regulated investment company (RIC) or a real estate investment trust (REIT); and (6) extend the period for notifying shareholders of the amount of qualified dividend income distributed by a RIC or a REIT.

(Sec. 403) Amends provisions of the Code enacted by the Job Creation and Worker Assistance Act of 2002 relating to: (1) bonus depreciation; (2) net operating loss carryback rules; (3) New York Liberty Zone bonus depreciation and expensing rules; (4) interest rates for defined benefit plan funding requirements; and (5) the tax exclusion for employer-provided adoption assistance.

(Sec. 404) Amends provisions of the Code enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 relating to: (1) Coverdell education savings accounts; (2) the Indian employment tax credit; and (3) tax-qualified retirement plans.

(Sec. 405) Amends provisions of the Code enacted by the Community Renewal Tax Relief Act of 2000 to authorize the Secretary of the Treasury to prescribe regulations relating to the tax treatment of certain securities futures contracts and options.

(Sec. 406) Amends provisions of the Code enacted by the Taxpayer Relief Act of 1997 relating to: (1) beneficiaries of qualified tuition programs and Coverdell education savings accounts; (2) basis adjustments for qualified zone academy bonds held by S corporations; and (3) the tax treatment of net capital gains under the alternative minimum tax.

(Sec. 407) Amends provisions of the Code enacted by the Business Job Protection Act of 1996 to: (1) provide that any increases to the income of a Subchapter S corporation resulting from an audit during the corporation's 120-day post-termination transition period shall not cover losses of the corporation carried over from a previous taxable year; and (2) allow tax-free distributions by an S corporation during the 120-day period only to the extent of any increase in the corporation's accumulated adjustments account resulting from an audit.

Provides that the amendments made by this title shall take effect as if included in the Act in which they were originally enacted.