Education Tax Credit Simplification Act of 2004 - Amends the Internal Revenue Code to revise the Hope and Lifetime Learning Tax Credits. Combines both credits into an Education Credit that allows certain students a tax credit of 50 percent of their qualified higher education expenses and educational expenses to acquire or improve job skills, up to $3,000 per year. Eliminates the annual cost of living adjustments to the allowable credit amount.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4136 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4136
To amend the Internal Revenue Code of 1986 to combine the Hope and
Lifetime Learning credits and to provide a uniform definition of
qualifying higher education expenses.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 2, 2004
Mr. Houghton 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 combine the Hope and
Lifetime Learning credits and to provide a uniform definition of
qualifying higher education expenses.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as ``Education Tax Credit Simplification Act
of 2004''.
SEC. 2. HOPE AND LIFETIME LEARNING CREDITS COMBINED.
(a) In General.--So much of section 25A of the Internal Revenue
Code of 1986 (relating to Hope and Lifetime Learning Credits) as
precedes subsection (d) is amended to read as follows:
``SEC. 25A. EDUCATION CREDIT.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year the amount equal to 50 percent of so much of the
qualified expenses paid by the taxpayer during the taxable year (for
education furnished to an individual during any academic period
beginning in such taxable year) as does not exceed $3,000 for such
taxable year with respect to such individual.
``(b) Qualified Expenses.--For purposes of subsection (a), the term
`qualified expenses' means the sum of--
``(1) qualified higher education expenses, and
``(2) the expenses described in subsection (d)(1) with
respect to any course of instruction at an eligible educational
institution to acquire or improve job skills of the
individual.''.
(b) Conforming Amendments to Credit.--
(1) Section 25A of such Code is amended--
(A) by striking subsection (h), and
(B) by redesignating subsections (d), (e), (f),
(g), and (i) as subsections (c), (d), (e), (f), and
(g), respectively.
(2) Subsection (f)(2) of section 25A of such Code, as so
redesignated, is amended by striking ``(before the application
of subsections (b), (c), and (d))''.
(c) Other Conforming and Clerical Amendments.--
(1) The following provisions of such Code are each amended
by striking ``section 25A(g)(2)'' and inserting ``section
25A(f)(2)'':
(A) Section 72(t)(7)(B).
(B) Section 221(d)(2)(B).
(C) Section 222(d)(1) (as amended by section 132 of
this Act).
(D) Section 529(c)(3)(B)(v)(I).
(E) Section 530(b)(2)(A).
(F) Section 530(d)(2)(C)(i)(I).
(G) Section 530(d)(4)(B)(iii).
(2) Section 221(d) of such Code is amended--
(A) in paragraph (2) by striking ``section
25A(f)(2)'' and inserting ``section 25A(e)(2)'', and
(B) by amending paragraph (3) to read as follows:
``(3) Eligible student.--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 this section, and
``(B) is carrying at least \1/2\ the normal full-
time work load for the course of study the student is
pursuing.''.
(3) Section 529(e)(3)(B)(i) of such Code is amended by
striking ``section 25A(b)(3)'' and inserting ``section
221(d)(3)''.
(4) The heading of section 529(c)(3)(B)(v) of such Code is
amended to read as follows: ``Coordination with education
credit.--''.
(5) The heading of section 530(d)(2)(C) of such Code is
amended to read as follows: ``Coordination with education
credit and qualified tuition programs.--''.
(6) Section 6050S(e) of such Code is amended by striking
``subsection (g)(2)'' and inserting ``subsection (f)(2)''.
(7) Section 6213(g)(2)(J) of such Code is amended by
striking ``section 25A(g)(1)'' and inserting ``section
25A(f)(1)''.
(8) The item relating to section 25A in the table of
sections for subpart A of part IV of subchapter A of chapter 1
of such Code is amended to read as follows:
``Sec. 25A. Education Credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 3. UNIFORM DEFINITION OF QUALIFYING HIGHER EDUCATION EXPENSES.
(a) In General.--Paragraph (3) of section 529(e) of such Code
(relating to other definitions and special rules) is amended to read as
follows:
``(3) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' means--
``(i) tuition, fees, books, supplies, and
equipment required for the enrollment or
attendance of a designated beneficiary at an
eligible educational institution; and
``(ii) expenses for special needs services
in the case of a special needs beneficiary
which are incurred in connection with such
enrollment or attendance.
``(B) Room and board included for students who are
at least half-time.--
``(i) In general.--In the case of an
individual who is an eligible student for any
academic period, such term shall also include
reasonable costs for such period (as determined
under the qualified tuition program) incurred
by the designated beneficiary for room and
board while attending such institution. For
purposes of subsection (b)(7), a designated
beneficiary shall be treated as meeting the
requirements of this clause.
``(ii) Limitation.--The amount treated as
qualified higher education expenses by reason
of clause (i) shall not exceed--
``(I) the allowance (applicable to
the student) for room and board
included in the cost of attendance (as
defined in section 472 of the Higher
Education Act of 1965 (20 U.S.C.
1087ll), as in effect on the date of
the enactment of the Economic Growth
and Tax Relief Reconciliation Act of
2001) as determined by the eligible
educational institution for such
period, or
``(II) if greater, the actual
invoice amount the student residing in
housing owned or operated by the
eligible educational institution is
charged by such institution for room
and board costs for such period.
``(iii) Eligible student.--For purposes of
this subparagraph, the term `eligible student'
means, with respect to any academic period, a
student who--
``(I) 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 this section, and
``(II) is carrying at least \1/2\
the normal full-time work load for the
course of study the student is
pursuing.
``(C) Exceptions.--
``(i) 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.
``(ii) 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.''.
(b) Conforming Amendments.--
(1) Section 25A and 6050S of such Code are each amended by
striking ``qualified tuition and related expenses'' each place
it appears and inserting ``qualified higher education
expenses''.
(2) Section 25A(e)(1) of such Code (as amended by this Act)
is amended to read as follows:
``(1) Qualified higher education expenses.--The term
`qualified higher education expenses' means the qualified
higher education expenses (as defined by section 529(e)(3)
without regard to subparagraph (B) thereof) required for the
enrollment or attendance of--
``(A) the taxpayer,
``(B) the taxpayer's spouse, or
``(C) 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.''.
(3) Section 135(c)(2) of such Code is amended--
(A) by striking ``tuition and fees'' and inserting
``the qualified higher education expenses (as defined
by section 529(e)(3) without regard to subparagraph (B)
thereof)'', and
(B) by striking subparagraph (B) and redesignating
subparagraph (C) as subparagraph (B).
(4) Section 221(d)(2) of such Code is amended by striking
``the cost of attendance (as defined in section 472 of the
Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on
the day before the date of the enactment of this Act)'' and
inserting ``the qualified higher education expenses (as defined
by section 529(e)(3) without regard to subparagraph (B)
thereof) incurred for attendance''.
(5)(A) Section 222 of such Code is amended by striking
``qualified tuition and related expenses'' each place it
appears and inserting ``qualified higher education expenses''.
(B) Section 222(d)(1) of such Code is amended to read as
follows:
``(1) Qualified higher education expenses.--The term
`qualified higher education expenses' has the meaning given
such term by section 529(e)(3) (without regard to subparagraph
(B) thereof). Such expenses shall be reduced in the same manner
as under section 25A(f)(2).''.
(C) Section 222(d) of such Code is amended by redesignating
paragraph (6) as paragraph (7) and by inserting after paragraph
(5) the following new paragraph:
``(6) Room and board included for students who are full-
time.--No amount shall be taken into account under this section
for an expense described in section 529(e)(3)(B) (relating to
room and board included for students who are at least half-
time) unless such individual is an eligible student (as defined
in section 25A(b)(3), determined by substituting `the normal
full-time work load' in lieu of `\1/2\ the normal full-time
work load' in subparagraph (B) thereof.''.
(D) The heading for section 222 of such Code is amended by
striking ``TUITION AND RELATED'' and inserting ``HIGHER
EDUCATION''.
(E) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by amending the item relating
to section 222 to read as follows:
``Sec. 222. Qualified higher education expenses.''.
(6)(A) Section 6724(d) of such Code is amended--
(i) in paragraph (1)(B)(x) by striking ``qualified
tuition and related expenses'' and inserting
``qualified higher education expenses'', and
(ii) in paragraph (2)(Z) by striking ``qualified
tuition and related expenses'' and inserting
``qualified higher education expenses''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid in taxable years beginning after December 31,
2003, for education furnished in periods beginning after such date.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E518)
Referred to the House Committee on Ways and Means.
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