Establishes the New York state foreign dependent children tax inclusion act

BILL NUMBER:S3201A

Title of bill

An act to amend the tax law, in relation to establishing the New York state foreign dependent children tax inclusion act

Purpose or general idea of bill

The purpose of the bill is to allow a resident taxpayer to receive a state income tax standard deduction and tax exemption for the financial support provided to a dependent child or children residing outside of the United States.

Summary of specific provisions

Subsection (c) of section 614 of the tax law is amended by adding subdivision (2) to allow:

(2) (A) For taxable years after 2015, an individual providing financial support to a dependent child or children residing outside of the United States to be considered as a head of household for purposes of this section when the individual provides certain proof as specified in this section.

(B) Provides the definition of "support" for the purposes of this section.

(C) Provides the definition of "dependent child" for the purposes of this section.

(D) Provides the penalty imposed for any taxpayer who submits a false or fraudulent document.

(3) Section 616 of the tax law is amended by adding a new subsection to allow, for taxable years after 2015, a resident taxpayer to receive a New York tax exemption for the financial support provided to a dependent child or children residing outside of the United States.

Section 4: Establishes the effective date and gives the commissioner of taxation and finance the authorization to promulgate rules and regulation necessary to implement this act.

Justification

Currently, under the New York State Tax Law, resident taxpayers are eligible for a standard deduction and tax exemption only when their dependent children are legal residents or citizens of the United States and currently live with them for more than half of the year. Many resident taxpayers provide financial support to their children who reside outside of the United States, which is a high expense for many New Yorkers especially in these economic times. These residents are taxed based on their total annual income without taking into consideration the significant support they provide to their families in other countries. This legislation does not provide a tax credit but a small standard deduction and tax exemption that will help them save some money and receive the same benefit ether taxpayers receive just because their children reside in the united states and live with them. This bill will not allow these taxpayers to receive an Earned Income Tax Credit (EITC) for these dependent children.

Prior legislative history

2011-12: S.7622/10079A - Investigations & Gov't Ups

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately.