HR2338-119

What This Bill Does

The Worker Relief and Credit Reform Act is a major EITC redesign. It treats qualifying students, certain caretakers, and taxpayers with broader qualifying dependents as having earned income for EITC purposes. Qualifying students include Pell Grant students or students under 300 percent of poverty, with rules for independent students and supporters. The bill lowers the childless-worker age threshold to 18, replaces qualifying child with qualifying dependent categories that include younger children, disabled spouses or relatives, and elderly relatives, sets an earned-income amount of $4,000 or $8,000 on joint returns, sets phaseout amounts of $30,000 or $50,000 on joint returns with inflation indexing, creates an added credit for unmarried taxpayers with two or more qualifying children, and requires Treasury to create advance monthly EITC payments up to 75 percent of the estimated credit with prepaid debit card access, recapture rules, online portal, one-on-one IRS help, and a 10-year education program.

Who Benefits and How

Low-income workers benefit from a restructured EITC with indexed earned-income and phaseout amounts. Pell Grant students benefit because qualifying students can be treated as having earned income for EITC purposes. Taxpayers caring for disabled relatives benefit because the qualifying dependent definition includes certain spouses and relatives incapable of self-care. Unmarried parents with two or more qualifying children benefit from an added credit percentage designed for larger single-parent households. EITC recipients choosing monthly advances benefit from cash-flow support before filing season and an option for prepaid debit card delivery.

Who Bears the Burden and How

IRS taxpayer assistance centers must provide in-person, telephone, and virtual consultations on advance-payment eligibility and overpayment risk. Treasury payment-system staff must build an online portal, monthly payment process, debit-card option, annual statements, recapture rules, and repayment restrictions. Taxpayers with excess advance payments must repay overpayments through increased tax and can be barred from future advances for two years after unpaid liabilities are cleared. Federal taxpayers bear the budget cost of a larger and more flexible EITC benefit.

Key Provisions

• Expands EITC eligibility to qualifying students, including Pell Grant students and students under 300 percent of poverty.
• Replaces qualifying child rules with a broader qualifying dependent framework covering young children, disabled spouses or relatives, and elderly relatives.
• Sets EITC earned-income and phaseout amounts at $4,000 or $8,000 on joint returns and $30,000 or $50,000 on joint returns, with inflation indexing.
• Creates an added EITC amount for unmarried taxpayers with two or more qualifying children.
• Requires advance monthly EITC payments up to 75 percent of estimated credit, with debit-card access, taxpayer statements, recapture, an online portal, and IRS assistance.