ARIZONA HOUSE OF REPRESENTATIVES

HB 2459: income tax; child tax credit

PRIME SPONSOR: Representative Mosley, LD 5

BILL STATUS: House Engrossed

Abstract

Relating to a tax credit for children.

Provisions

1. Establishes a tax credit for each qualifying child for whom the taxpayer is allowed a dependent exemption. (Sec. 2)

2. Sets the amount of the tax credit at $250.

a. Reduces the amount of the tax credit by 5% for each $1,000 or fraction of $1,000 by which the taxpayer's Arizona Adjusted Gross Income exceeds the threshold amount.

b. Defines threshold amount as:

i. 200% of the FPL for a husband and wife filing a joint return.

ii. 136.4% of the FPL for a taxpayer filing as a single individual.

iii. 100% of the FPL for a married taxpayer filing separately. (Sec. 2)

3. Requires a child who can be claimed by more than one taxpayer to be treated as the qualifying child by the taxpayer who is the parent, or if not a parent, the taxpayer with the highest Arizona Adjusted Gross Income. (Sec. 2)

4. Requires a child, whose parents file separately, to be treated as the qualifying child of the parent with whom the child resided the longest period of time with during the TY.

a. Stipulates if the child resided with each parent equally, the child is treated as the qualifying child of the parent with the highest Arizona Adjusted Gross Income. (Sec. 2)

5. Stipulates if two or more taxpayers claim the same qualifying child and cannot agree who will claim the credit, DOR is required to deny the credit until the issue is resolved in a court of competent jurisdiction. (Sec. 2)

6. Requires DOR to deny a credit claimed if the taxpayer is delinquent in court-ordered payments for spousal maintenance or child support. (Sec. 2)

7. Stipulates the tax credit is not refundable or subject to carryforward. (Sec. 2)

8. Defines qualifying child and federal poverty level. (Sec. 2)

9. Contains a purpose statement. (Sec. 3)

10. Makes a conforming change. (Sec. 1)

Current Law

A taxpayer is allowed an exemption of $2,300 for each dependent (A.R.S. § 43-1023). A dependent is a qualifying child or relative. A qualifying child is an individual who: 1) has the same principal place of abode for more than half the TY; 2) is less than 19 years old or a student less than 24 years old; 3) has not provided over one-half of such individual's own support for the CY; and 4) has not filed a joint return with the individual's spouse. A qualifying relative is an individual who: 1) is a brother, sister, stepbrother or stepsister of the taxpayer; 2) has a gross income for the CY less than the exemption amount; 3) the taxpayer provides one-half of the individual's support for the CY; and 4) is not a qualifying child of the taxpayer (IRC § 152).  

Additional Information

The 2018 federal poverty guidelines can be found on the United States Department of Health and Human Services website.

A tax credit is a dollar-for-dollar reduction in a taxpayer’s income tax liability. Tax credits are often

offered to incentivize some type of action from a taxpayer, such as creating new jobs, investing in

environmentally friendly technology or any other action deemed beneficial to the economy.

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Fifty-third Legislature                  HB 2459

Second Regular Session                               Version 4: House Engrossed

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