< Back to H.R. 1738 (113th Congress, 2013–2015)

Text of the American Opportunity Tax Credit Act of 2013

This bill was introduced on April 25, 2013, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 25, 2013 (Introduced).

I

113th CONGRESS

1st Session

H. R. 1738

IN THE HOUSE OF REPRESENTATIVES

April 25, 2013

(for himself,Mr. Danny K. Davis of Illinois,Mr. Becerra,Mr. Blumenauer,Mr. Crowley,Mr. Kind,Mr. Larson of Connecticut,Mr. Carson of Indiana,Mr. Lewis,Mr. McDermott,Mr. Pascrell,Mr. Rangel,Ms. Linda T. Sánchez of California,Ms. Schwartz,Mr. Levin,Mr. Van Hollen,Mr. Hinojosa,Mr. Andrews,Mrs. Capps,Mr. Cárdenas,Ms. Castor of Florida,Mrs. Christensen,Mr. Cicilline,Mr. Cohen,Mr. Cuellar,Mr. Cummings,Ms. Fudge,Mr. Gallego,Mr. Garamendi,Mr. Al Green of Texas,Mr. Gene Green of Texas,Mr. Hastings of Florida,Mr. Holt,Mr. Honda,Ms. Eddie Bernice Johnson of Texas,Ms. Lee of California,Mr. Loebsack,Ms. Matsui,Ms. McCollum,Ms. Moore,Mr. Pastor of Arizona,Mr. Ryan of Ohio,Ms. Schakowsky,Ms. Shea-Porter,Mr. Sherman,Mr. Sires,Ms. Speier,Mr. Thompson of Mississippi,Mr. Vela,Mr. Welch,Mr. Yarmuth,Mr. Pocan,Ms. Jackson Lee,Mrs. Negrete McLeod,Mr. Vargas,Mr. Tonko,Mr. DeFazio,Mr. Grijalva,Ms. Edwards,Ms. Wilson of Florida,Ms. Titus,Mrs. Davis of California,Mr. Nadler,Mr. Rush,Ms. Bass,Mr. Butterfield,Mr. Capuano,Mr. Cleaver,Mr. Doyle,Mr. Fattah,Mr. Deutch,Mr. Kildee, andMr. Price of North Carolina) introduced the following bill; which was referred to theCommittee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to extend and modify the American Opportunity Tax Credit, and for other purposes.

1.

Short title

This Act may be cited as the American Opportunity Tax Credit Act of 2013 .

2.

Extension and modification of American Opportunity Tax Credit

(a)

In general

Section 25A of the Internal Revenue Code of 1986is amended to read as follows:

25A.

American Opportunity Tax Credit

(a)

Allowance of credit

In the case of an individual who is an eligible student for any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year the amount determined undersubsection (b)with respect to such individual.

(b)

Amount of credit

(1)

Student enrolled at least½time

In the case of an eligible student who is carrying at least½the normal full-time workload for the course of study the student is pursuing, the amount determined under this subsection with respect to such individual is the sum of—

(A)

100 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 student during any academic period beginning in such taxable year) as does not exceed $2,000, plus

(B)

25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.

(2)

Other students

In the case of an eligible student not described inparagraph (1), the amount determined under this subsection with respect to such individual is 25 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 student during any academic period beginning in such taxable year) as does not exceed $10,000.

(c)

Limitation based on modified adjusted gross income

(1)

In general

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

(2)

Amount of reduction

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—

(A)

the excess of—

(i)

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

(ii)

$80,000 ($160,000 in the case of a joint return), bears to

(B)

$10,000 ($20,000 in the case of a joint return).

(3)

Modified adjusted gross income

For purposes of this paragraph, the termmodified adjusted gross incomemeans the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income undersection 911,931, or933.

(d)

Other limitations and special rules

For purposes of this section:

(1)

Lifetime dollar limitation

In the case of qualified tuition and related expenses with respect to any eligible student, the aggregate amount of the credits allowed in the taxable year and any prior taxable year for such eligible student (whether beginning before or after American Opportunity Tax Credit Act of 2013 ) shall not exceed $15,000, determined without regard to whether—

(A)

such credits are claimed on the return of tax filed by the eligible student or by another taxpayer, or

(B)

such expenses are treated as paid by the eligible student or by another taxpayer.

If, in any taxable year, the aggregate amount of such credits equals or exceeds $15,000, the amount allowed as a credit undersubsection (a)in any subsequent taxable year with respect to such student shall be zero.
(2)

Identification requirement

No credit shall be allowed under this section to a taxpayer with respect to the qualified tuition and related expenses of an eligible student unless the taxpayer includes the name and taxpayer identification number of such eligible student on the return of tax for the taxable year.

(3)

Adjustment for certain scholarships, etc

(A)

In general

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

(i)

a qualified scholarship which is excludable from gross income undersection 117,

(ii)

an educational assistance allowance underchapter 30,31,32,34, or35 of title 38, United States Code, or under chapter 1606of title 10, United States Code, and

(iii)

a payment (other than a gift, bequest, devise, or inheritance within the meaning ofsection 102(a)) for such individual'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.

(B)

Coordination with Pell Grants not used for qualified tuition and related expenses

Any amount determined with respect to an individual undersubparagraph (A)which is attributable to a Federal Pell Grant undersection 401 of the Higher Education Act of 1965shall be reduced (but not below zero) by the amount of the expenses (other than qualified tuition and related expenses) which are taken into account in determining the cost of attendance (as defined insection 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of the American Opportunity Tax Credit Act of 2013 ) of such individual at an eligible educational institution for the academic period for which the credit under this section is being determined.

(4)

Treatment of expenses paid by dependent

If a deduction undersection 151with 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 this section 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.

(5)

Treatment of certain prepayments

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.

(6)

Denial of double benefit

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

(7)

No credit for married individuals filing separate returns

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

(8)

Nonresident aliens

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 undersubsection (g)or(h) of section 6013.

(e)

Election not To have Section apply

A taxpayer may elect not to have this section apply with respect to the qualified tuition and related expenses of an individual for any taxable year.

(f)

Definitions

For purposes of this section:

(1)

Eligible student

The termeligible studentmeans, with respect to any taxable year, an individual who—

(A)

is enrolled for at least one academic period which begins during such taxable year at an eligible educational institution, and

(B)

meets the requirements ofsection 484(a)(1) of the Higher Education Act of 1965, as in effect on the date of the enactment of the American Opportunity Tax Credit Act of 2013 .

(2)

Qualified tuition and related expenses

(A)

In general

The termqualified tuition and related expensesmeans tuition, fees, and course materials required for the enrollment or attendance of—

(i)

the taxpayer,

(ii)

the taxpayer's spouse, or

(iii)

any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction undersection 151,

at an eligible educational institution for courses of instruction of such individual at such institution.
(B)

Exception for education involving sports, etc

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.

(C)

Exception for nonacademic fees

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)

Eligible educational institution

The termeligible educational institutionmeans an institution—

(A)

which is described insection 481 of the Higher Education Act of 1965, as in effect on the date of the enactment of the American Opportunity Tax Credit Act of 2013 , and

(B)

which is eligible to participate in a program undertitle IV of such Act.

(g)

Portion of credit refundable

Forty percent of the credit allowed under this section for a taxable year (determined after application ofsubsections (c)(1)and(d)and without regard to this subsection andsection 26(a)(2), as the case may be) shall be treated as a credit allowable under subpart C (and not allowed under this section). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whomsubsection (g) of section 1applies for such taxable year.

(h)

Inflation Adjustment

In the case of any taxable year beginning in a calendar year after 2014, each dollar amount insubsections (b)and(c)(2), and(d)(1)shall be increased by an amount equal to—

(1)

such dollar amount, multiplied by

(2)

the cost-of-living adjustment determined undersection 1(f)(3)for the calendar year in which the taxable year begins, determined by substitutingcalendar year 2013forcalendar year 1992insubparagraph (B)thereof.

In the case ofsubsections (b)and(d)(1), any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50. In the case ofsubsection (c)(2), any increase determined under the preceding sentence shall be rounded to the nearest multiple of $500.
(i)

Regulations

TheSecretarymay 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 amount which was taken into account in determining the amount of such credit.

.

(b)

Retention of limitation

(1)

In general

Subparagraph (D) of section 25A(b)(2) of the Internal Revenue Code of 1986, as in effect before the enactment of the American Opportunity Tax Credit Act of 2013 hereby transferred tosection 25A of such Code, as amended bysubsection (a), and is inserted as a newsubsection (d)(9) of section 25A, as so amended.

(2)

Conforming amendment

Paragraph (9) of section 25A(d) of such Code, as transferred and inserted byparagraph (1), is amended by strikingThe Hope Scholarship Credit under subsection (a)(1)and insertingThe credit under subsection (a).

(c)

Clerical amendment

The item relating tosection 25Ain the table of sections forsubpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986is amended to read as follows:

Sec. 25A. American Opportunity Tax Credit.

.

(d)

Conforming amendments

(1)

Subparagraph (B) of section 72(t)(7) of such Codeis amended by striking25A(g)(2)and inserting 25A(d)(3) .

(2)

Paragraph (2) of section 221(d) of such Codeis amended—

(A)

by striking25A(g)(2)insubparagraph (B)and inserting 25A(d)(3) , and

(B)

by striking25A(f)(2)and inserting 25A(f)(3) .

(3)

Paragraph (3) of section 221(d) of such Codeis amended by striking25A(b)(3)and inserting 25A(f)(1)(but only with respect to a student who is carrying at least½the normal full-time workload for the course of study the student is pursuing).

(4)

Clause (v) of section 529(c)(3)(B) of such Codeis amended—

(A)

by striking25A(g)(2)insubclause (I)and inserting 25A(d)(3) , and

(B)

by striking Hope and Lifetime Learning credits in the heading and inserting American Opportunity Credit .

(5)

Clause (i) of section 529(e)(3)(B) of such Codeis amended by striking25A(b)(3)and inserting 25A(f)(1)(but only with respect to a student who is carrying at least½the normal full-time workload for the course of study the student is pursuing).

(6)

Subparagraph (C) of section 530(d)(2) of such Codeis amended—

(A)

by striking25A(g)(2)inclause (i)(I)and inserting 25A(d)(3) , and

(B)

by striking Hope and Lifetime Learning credits in the heading and inserting American Opportunity Credit .

(7)

Clause (iii) of section 530(d)(4)(B) of such Codeis amended by striking25A(g)(2)and inserting 25A(d)(3) .

(8)

Section 1400O of such Codeis amended—

(A)

by striking25A(f)(2)and inserting 25A(f)(3) ,

(B)

by inserting(as in effect on the date of the enactment of this section)after25A(b)(1)inparagraph (2), and

(C)

by inserting(as in effect on the date of the enactment of this section)after25A(c)(1)inparagraph (3).

(9)

Subsection (e) of section 6050S of such Codeis amended by strikingsubsection (g)(2)and inserting subsection (d)(3) .

(10)

Subparagraph (A) of section 6211(b)(4) of such Codeis amended by strikingsubsection (i)(6)and inserting subsection (g) .

(11)

Subparagraph (J) of section 6213(g)(2) of such Codeis amended by striking25A(g)(1)and inserting 25A(d)(2) .

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2013.

3.

Expansion of Pell Grant exclusion from gross income

(a)

In general

Paragraph (1) of section 117(b) of the Internal Revenue Code of 1986is amended by strikingreceived by an individualand all that follows and inserting “received by an individual—

(1)

as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or

(2)

as a Federal Pell Grant undersection 401 of the Higher Education Act of 1965(as in effect on the date of the enactment of the American Opportunity Tax Credit Act of 2013 ).

.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2013.