Simplification Bill Aimed at Child-Related Tax Breaks

The Treasury Department used Monday’s tax filing deadline to launch the first in an expected series of tax simplification proposals--this one aimed at creating a single definition of a “qualifying child” for purposes of all the various child-oriented tax breaks.

Next year, there will be more than 52 million taxpayers with children. They shouldn’t have to sift through several definitions to find out whether they can claim any or each of the tax breaks related to children, Treasury Secretary Paul O’Neill said.

Among the areas of the tax code that have different definitions of who qualifies as a child for tax purposes: the child tax credit, the earned income tax credit, the child-care tax credit, head of household filing status and dependency exemptions.

Rep. Rob Portman (R-Ohio) plans this week to introduce a tax simplification measure that will create a single definition of a child and attack other areas of chronic confusion, such as the alternative minimum tax and the variety of income levels at which different tax breaks “phase out.”

“Every American knows what a child is, yet the tax code defines child in six different ways,” Portman said. “This is the type of thing that makes tax forms a nightmare to fill out.”