Caregivers and Tax Reform: Before and After Snapshots

42 Pages Posted: 12 May 2020

Date Written: April 17, 2020

Abstract

The Tax Cuts and Jobs Act (TCJA) changed the way families are taxed, starting in tax year 2018. By rearranging a myriad of deck chairs, politicians painted rosy pictures of families reaping the benefits of tax reform. In reality, however, generalizations cannot be made and the extent to which any one family gains or loses depends on particular facts. Even more obscured is the way in which the TCJA changed –– and failed to change –– the taxation of different types of caregivers. This Essay seeks to provide needed clarity in this area. It begins by offering snapshots of how parents of minor children were taxed immediately prior to and after the TCJA’s enactment. Specifically, while the TCJA expanded some of the general benefits available to parents of minor children, it failed to expand — and in critical cases, even preserve — specific benefits that are contingent on “parenting model.” For instance, the TCJA departed from historical norms by rolling back benefits reserved for unmarried parents and failed to make long over-due inflation adjustments to provisions of the Code that allow dual earning couples and unmarried parents (but not sole earning couples) to recover childcare costs incurred to work outside the home. These snapshots reveal how Congress, through the TCJA, picked winners and losers, enacting tax reform that disproportionately favored sole earners at the expense of other parents.

This Essay next turns to other types of care-giving, such as elder care, and develops two more pre-and post-reform snapshots. These pictures show how the inequities that result from Congress’ favoritism of sole earners extend to other care-giving arrangements and how these inequities compound for members of the “sandwich generation” who provide both parental and non-parental care. In the end, this Essay develops a series of snapshots that contrast starkly with rosy political rhetoric and which reveal that the TCJA not only failed to address many pre-existing tax inequities between caregivers but also made them worse.

Keywords: Income Tax, Taxation, Parents, Children, Childcare, Elder Care, Dual Earners, Sole Earners, Dependent Care, Internal Revenue Code, Marital Status, Single Parents, Marriage, Earned Income Tax Credit (Eitc), Additional Child Tax Credit (Actc)

Suggested Citation

McCormack, Shannon Weeks, Caregivers and Tax Reform: Before and After Snapshots (April 17, 2020). Virginia Tax Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3579034 or http://dx.doi.org/10.2139/ssrn.3579034

Shannon Weeks McCormack (Contact Author)

University of Washington School of Law ( email )

William H. Gates Hall
Box 353020
Seattle, WA 98105-3020
United States

HOME PAGE: https://www.law.washington.edu/directory/profile.aspx?ID=723

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