Text of H.R. 518 (111th): Middle Class College Tuition Tax Credit Expansion Act of 2009 (Introduced version)

111th CONGRESS

1st Session

H. R. 518

IN THE HOUSE OF REPRESENTATIVES

January 14, 2009

Mr. Israel (for himself, Mr. Rodriguez, Mr. Ryan of Ohio, Mr. Weiner, Ms. Bean, and Ms. Shea-Porter) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to consolidate the current education tax incentives as one credit against income tax for qualified tuition and related expenses.

This Act may be cited as the Middle Class College Tuition Tax Credit Expansion Act of 2009.

(a)

Section 25A of the Internal Revenue Code of 1986 (relating to Hope and Lifetime Learning Credits) is amended to read as follows:

25A.

(a)

In the case of any eligible individual for whom an election is in effect under this section, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible individual during any academic period beginning in such taxable year) as does not exceed $10,000.

(b)

(1)

(A)

The amount which would (but for this paragraph) be taken into account under subsection (a) for the taxable year shall be reduced (but not below zero) by the amount determined under paragraph (2).

(B)

The amount determined under this paragraph is the amount which bears the same ratio to the amount which would be so taken into account as—

(i)

the excess of—

(I)

the taxpayer's modified adjusted gross income for such taxable year, over

(II)

the applicable amount under paragraph (4), bears to

(ii)

$5,000 ($10,000 in the case of a joint return).

(C)

The term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

(D)

The applicable amount under this subparagraph is—

(i)

in the case of a joint return, 200 percent of the dollar amount in effect under subparagraph (B) for the taxable year, and

(ii)

in any other case, $100,000.

(2)

An election to have this section apply with respect to any eligible individual may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such individual for any 4 prior taxable years.

(c)

For purposes of this section—

(1)

The term eligible individual means any individual described in paragraph (2).

(2)

(A)

The term qualified tuition and related expenses means tuition and fees required for the enrollment or attendance of —

(i)

taxpayer,

(ii)

the taxpayer's spouse, or

(iii)

any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151, at an eligible educational institution for courses of instruction of such individual at such institution.

(B)

Such term shall include books required for such individual's academic courses of instruction at the eligible educational institution.

(C)

Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual's degree program.

(D)

Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual's academic course of instruction.

(3)

Ther term eligible educational institution means an institution—

(A)

which is described in section 481 of the Higher Education Act of 1965, as in effect on the date of the enactment of the Taxpayer Relief Act of 1997, and

(B)

which is eligible to participate in a program under title IV of the Higher Education Act of 1965.

(d)

(1)

No credit shall be allowed under subsection (a) to a taxpayer with respect to an eligible student unless the taxpayer includes the name and taxpayer identification number of such student on the return of tax for the taxable year.

(2)

The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsections (a) and (b)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as—

(A)

a qualified scholarship which is excludable from gross income under section 117,

(B)

an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, and

(C)

a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such student's educational expenses, or attributable to such individual's enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States.

(3)

If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins—

(A)

no credit shall be allowed under subsection (a) to such individual for such individual's taxable year, and

(B)

qualified tuition and related expenses paid by such individual during such individual's taxable year shall be treated for purposes of this section as paid by such other taxpayer.

(4)

if qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year.

(5)

No credit shall be allowed under this section for any expense for which deduction is allowed under any other provision of this chapter.

(6)

If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.

(7)

If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.

(e)

(1)

In the case of a taxable year beginning after 2009, the $100,000 amount in subsection (b)(1)(D)(ii) shall each be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2008 for calendar year 1992 in subparagraph (B) thereof.

(2)

If any amount as adjusted under paragraph (1) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.

(f)

The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any expense which was taken into account in determining the amount of such credit.

(b)

Part VII of subchapter B of chapter 1 of such Code (relating to additional itemized deductions for individuals) is amended by striking section 222.

(c)

(1)

Section 62(a) of such Code is amended by striking paragraph (18).

(2)

Subparagraph (A) of section 86(b)(2) of such Code is amended by striking , 222.

(3)

Subparagraph (B) of section 72(t)(7) of such Code is amended by striking section 25A(g)(2) and inserting section 25A(d)(2).

(4)

Subparagraph (A) of section 135(c)(4) of such Code is amended by striking , 222.

(5)

Subparagraph (A) of section 137(b)(3) of such Code is amended by striking , 222.

(6)

Subparagraph (A) of section 199(d)(2) of such Code is amended by striking , 222.

(7)

Clause (ii) of section 219(g)(3)(A) of such Code is amended by striking , 222.

(8)

Clause (i) of section 221(b)(2)(C) of such Code is amended by striking , 222.

(9)

Clause (iii) of section 469(i)(3)(F) of such Code is amended by striking 221, and 222 and inserting and 221.

(10)

Subsection (d) of section 221 of such Code is amended—

(A)

by striking section 25A(g)(2) in paragraph (2)(B) and inserting section 25A(d)(2), and

(B)

by striking section 25A(f)(2) in the second sentence of paragraph (2) and inserting section 25A(c)(3).

(11)

Paragarph (3) of section 221(d) of such Code is amended to read as follows:

(3)

The term eligible student means, with respect to any academic period, a student who—

(A)

meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on the date of the enactment of the Taxpayer Relief Act of 1997, and

(B)

is carrying at least ½ the normal full-time workload for the course of study the student is pursuing.

(12)

Subclause (I) of section 529(c)(3)(B)(v) of such Code is amended by striking section 25A(g)(2) and inserting section 25A(d)(2).

(13)

Clause (i) of section 529(e)(3)(B) of such Code is amended by striking section 25A(b)(3) and inserting section 221(d)(3).

(14)

Subclause (I) of section 530(d)(2)(C)(i) of such Code is amended by striking section 25A(g)(2) and inserting section 25A(d)(2).

(15)

Clause (iii) of section 530(d)(4)(B) of such Code is amended by striking section 25A(g)(2) and inserting section 25A(d)(2).

(16)

Section 1400O of such Code is amended by adding at the end the following flush sentence:

For purposes of this section, any reference to section 25A shall be treated as a reference to such section as in effect on the day before the date of the enactment of this sentence.

(17)

Subparagraph (J) of section 6213(g)(2) of such Code is amended by striking section 25A(g)(1) and inserting section 25A(d)(1).

(d)

(1)

The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 25A and inserting the following:

25A. Qualified tuition and related expenses credit.

(2)

The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 222.

(e)

The amendments made by this section shall apply to expenses paid after December 31, 2009, for education furnished in academic periods beginning after such date.