Democrats want no child left off taxes

It can’t be coincidence that the same week House Democrats announce plans to overhaul the legal definition of a child for the purpose of claiming the child tax credit, explorers made the first known descent into the infamous “Well of Hell” in Yemen. The cavers found a snake pit. And so will both the IRS and taxpayers.

As Politico reported, Democrats want to expand the definition so more people can claim the benefit, up to $3,600 per child. They want to dump the old rules, which require a child to be related to the person taking the credit. Instead, the money would go to whoever is caring for the child, relative or not.

Understandable, because these days, not all children live with a relative. Researchers say hundreds of thousands of kids are currently ineligible for the benefit because they live with, say, a family friend.

But according to some, what Democrats are proposing would be a minor nightmare for the already burdened IRS to enforce.

And it won’t be a picnic for taxpayers, because lawmakers would keep the definition of a child used for other tax benefits such as the Earned Income Tax Credit — so people would have to work with multiple tax definitions of a child.

It’s hard to believe that government could take something as complicated as filing one’s taxes and make it even more convoluted, and yet here we are.

This proposal is part of a mega package of tax and spending changes approved last week by the House Ways and Means Committee.

Democrats plan to extend their new monthly Child Tax Credit payment program beyond this year. It is now sending monthly payments worth up to $300 per child to 35 million families.

Under current rules, the child in question must be a relative of the tax credit claimer, and the list of accepted relations includes sons, daughters, foster children, brothers, sisters, nieces, nephews and grandchildren, among others.

The child also must live with the person claiming the credit for more than half the year.

But that formula leaves some children out of the equation.

People at the bottom of the income ladder — the main target of Democrats’ Child Tax Credit initiative — are more likely to have eclectic living situations, researchers say. About 330,000 kids don’t qualify for the monthly payments because they live with a cousin or neighbor or someone else the IRS says isn’t a close relative, said Jacob Goldin, a former Treasury official who now teaches at Stanford University’s law school.

House Democrats want that rule gone in 2023.

Instead, they’d require people claiming the benefit to be someone who provides uncompensated care for a child, including supervising their daily activities. That would also include maintaining a “secure environment” in which the child lives; arranging for their medical care; and being involved in “financial and other support” for education “or similar activities of the individual.”

And a child wouldn’t have to live with someone for more than half a year to qualify. Under the new rule, a half a month will do for that month’s payment.

Multiple people could take credit for the child, just not at the same time.

Now, an audit wouldn’t simply require receipts, but proof that the taxpayer was the one who brought the child to a doctor that month.

And it would now be the IRS’ job to determine who is supervising a child and when.

In other words, a bureaucratic snake pit.