College Affordability Act of 2013 - Amends the Internal Revenue Code to replace the Hope Scholarship and Lifetime Learning tax credits with a new American Opportunity Tax Credit that allows: (1) a 100% income tax credit, up to $2,500 in a taxable year, of the qualified tuition and related expenses (i.e., tuition, fees, and course materials) of a student at an institution of higher education who is carrying at least one half of a normal full-time work load; (2) a life-time aggregate credit amount of up to $10,000; and (3) refundability of a portion of such credit. Denies such credit to students who are convicted of a federal or state felony offense involving the possession or distribution of a controlled substance.
Allows an exclusion from gross income of any amount received as a Federal Pell Grant.
Establishes programs for: (1) periodic payments to students as qualified expenses are incurred during the taxable year, and (2) informing the public of the availability of the American Opportunity Tax Credit.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3437 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 3437
To amend the Internal Revenue Code of 1986 to consolidate, with
modifications, the Hope Scholarship Credit, the Lifetime Learning
Credit, and the American Opportunity Tax Credit, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 30, 2013
Ms. Schwartz introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Education and the Workforce, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to consolidate, with
modifications, the Hope Scholarship Credit, the Lifetime Learning
Credit, and the American Opportunity Tax Credit, and for other
purposes.
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 the ``College Affordability Act of 2013''.
SEC. 2. CONSOLIDATION OF EDUCATION CREDITS WITH MODIFICATIONS.
(a) In General.--Section 25A of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 25A. AMERICAN OPPORTUNITY TAX 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 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
$2,500.
``(b) Lifetime Limitation on Aggregate Credit.--In the case of
qualified tuition and related expenses with respect to any individual,
the aggregate amount of the credits claimed under this section for all
taxable years shall not exceed $10,000, determined without regard to
whether--
``(1) such credits are claimed on the return of tax filed
by the individual or by another taxpayer, or
``(2) such expenses are treated as paid by the individual
or by another taxpayer.
``(c) Limitation Based on Modified Adjusted Gross Income.--
``(1) In general.--The amount which would (but for this
subsection) be taken into account under this section for the
taxable year shall be reduced (but not below zero) by the
amount determined under paragraph (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 (twice such amount 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
subsection, 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) Other Limitations.--
``(1) Credit allowed for year only if individual is at
least \1/2\ time student for portion of year.--The credit under
this section shall not be allowed for a taxable year with
respect to the qualified tuition and related expenses of an
individual unless such individual is an eligible student for at
least one academic period which begins during such year.
``(2) Denial of credit if student convicted of a felony
drug offense.--The credit under subsection (a) shall not be
allowed for qualified tuition and related expenses for the
enrollment or attendance of a student for any academic period
if such student has been convicted of a Federal or State felony
offense consisting of the possession or distribution of a
controlled substance before the end of the taxable year with or
within which such period ends.
``(e) Definitions.--For purposes of this section:
``(1) 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 August 5, 1997, and
``(B) is carrying at least \1/2\ the normal full-
time work load for the course of study the student is
pursuing.
``(2) Qualified tuition and related expenses.--
``(A) In general.--The term `qualified tuition and
related expenses' means 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 under section 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 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 August 5,
1997, and
``(B) which is eligible to participate in a program
under title IV of such Act.
``(f) Other Limitations and Special Rules.--For purposes of this
section:
``(1) Identification requirement.--No credit shall be
allowed under this section to a taxpayer with respect to the
qualified tuition and related expenses of an individual unless
the taxpayer includes the name and taxpayer identification
number of such individual on the return of tax for the taxable
year.
``(2) 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 of subsections (a) 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 under section 117,
``(ii) 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
``(iii) a payment (other than a gift,
bequest, devise, or inheritance within the
meaning of section 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 under
subparagraph (A) which is attributable to a Federal
Pell Grant under section 401 of the Higher Education
Act of 1965 shall 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 in section 472 of the Higher Education Act of
1965, as in effect on the date of the enactment of this
subparagraph) of such individual at an eligible
educational institution for the academic period for
which the credit under this section is being
determined.
``(3) Treatment of expenses paid by dependent.--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 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.
``(4) 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.
``(5) 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.
``(6) No credit for married individuals filing separate
returns.--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) 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 under subsection (g) or (h) of
section 6013.
``(g) Portion of Credit Refundable.--
``(1) In general.--80 percent of the amount which would
(but for this subsection and section 26) be allowed as a credit
allowed under this section for the taxable year 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 whom subsection (g) of section 1 applies for such taxable
year.
``(2) Maximum amount refundable.--The amount treated by
paragraph (1) as a credit allowable under subpart C for any
taxable year shall not exceed $1,500.
``(h) Inflation Adjustments.--
``(1) In general.--In the case of taxable years beginning
after 2014, the $2,500 and $3,000 amounts in subsection (a),
the $10,000 amount in subsection (b), the $80,000 amount in
subsection (c)(2)(A)(ii), and the $1,500 in subsection (g)(2)
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 2013' for `calendar year 1992' in
subparagraph (B) thereof.
``(2) Rounding.--
``(A) In general.--If the $1,500, $2,500, $3,000,
or $10,000 amount as adjusted under paragraph (1) is
not a multiple of $100, such amount shall be rounded to
the next lowest multiple of $100.
``(B) $80,000 amount.--If the $80,000 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.
``(i) 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.
``(j) Regulations.--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 amount which was taken into account in determining the amount of
such credit.
``(k) Pilot Program To Make Periodic Payments as College Expenses
Incurred.--
``(1) In general.--The Secretary of the Treasury and the
Secretary of Education shall jointly establish a program
designed to make payments periodically to or on behalf of an
eligible student as the student incurs qualified expenses
during the taxable year. The total amount that may be so paid
to or on behalf of an eligible student through this program
shall not exceed the credit which would (but for paragraph (2))
be allowable under this section if subsection (c) were applied
by using the taxpayer's modified adjusted gross income for the
preceding taxable year.
``(2) Credit reduced by pilot program payments.--The credit
allowable under this section (without regard to this paragraph)
for any taxable year shall be reduced (but not below zero) by
the payments made with respect to a student under paragraph (1)
for expenses which would otherwise be taken into account in
determining the credit under this section for such year.
``(3) Program participation.--Participation in the program
established under this subsection shall be voluntary with
respect to both students and educational institutions; except
that, institutions which are taxable under this chapter (other
than by reason of section 511) may not participate in such
program.
``(4) Program period.--The program established under this
subsection shall apply to expenses for academic periods
beginning during the 5-year period which begins on the date
which is 1 year after the date of the enactment of this
subsection.
``(5) Payments not treated as resources for financial
aid.--Payments made under this subsection shall not be treated
as resources for purposes of determining the amount of any
financial aid which is funded in whole or part with Federal
funds. Payments under the program shall not be made in a manner
that would reduce the State, private, or institutional aid
available to an eligible student.
``(6) Notice of program.--Educational institutions
participating in the program established under this subsection
shall provide appropriate notices to parents and students of
the option of payments under such program. Such notices shall
not be considered tax advice for purposes of any Federal law or
regulation.
``(7) Reporting.--The Secretary of the Treasury and the
Secretary of Education shall jointly submit annual reports to
Congress on the program established under this subsection,
together with any recommendations with respect to such
program.''.
(b) Clerical Amendment.--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. American Opportunity Tax Credit.''.
(c) Conforming Amendments.--
(1) Subparagraph (B) of section 72(t)(7) of such Code is
amended by striking ``25A(g)(2)'' and inserting ``25A(f)(2)''.
(2) Paragraph (2) of section 221(d) of such Code is
amended--
(A) by striking ``25A(g)(2)'' in subparagraph (B)
and inserting ``25A(f)(2)'', and
(B) by striking ``25A(f)(2)'' and inserting
``25A(e)(3)''.
(3) Paragraph (3) of section 221(d) of such Code is amended
by striking ``25A(b)(3)'' and inserting ``25A(e)(1)''.
(4) Paragraph (1) of section 222(d) of such Code is
amended--
(A) by striking ``25A(f)'' and inserting
``25A(e)(2)'', and
(B) by striking ``25A(g)(2)'' and inserting
``25A(f)(2)''.
(5) Clause (v) of section 529(c)(3)(B) of such Code is
amended--
(A) by striking ``25A(g)(2)'' in subclause (I) and
inserting ``25A(f)(2)'', and
(B) by striking ``Hope and lifetime learning
credits'' in the heading and inserting ``American
opportunity tax credit''.
(6) Clause (i) of section 529(e)(3)(B) of such Code is
amended by striking ``25A(b)(3)'' and inserting ``25A(e)(1)''.
(7) Subparagraph (C) of section 530(d)(2) of such Code is
amended--
(A) by striking ``25A(g)(2)'' in clause (i)(I) and
inserting ``25A(f)(2)'', and
(B) by striking ``Hope and lifetime learning
credits'' in the heading and inserting ``American
opportunity tax credit''.
(8) Clause (iii) of section 530(d)(4)(B) of such Code is
amended by striking ``25A(g)(2)'' and inserting ``25A(f)(2)''.
(9) Section 1400O of such Code is amended--
(A) by striking ``25A(f)(2)'' and inserting
``25A(e)(3)'',
(B) by inserting ``(as in effect on the date of the
enactment of this section)'' after ``25A(b)(1)'' in
paragraph (2), and
(C) by inserting ``(as in effect on the date of the
enactment of this section)'' after ``25A(c)(1)'' in
paragraph (3).
(10) Subsection (e) of section 6050S of such Code is
amended by striking ``subsection (g)(2)'' and inserting
``subsection (f)(2)''.
(11) Subparagraph (A) of section 6211(b)(4) of such Code is
amended by striking ``subsection (i)(6)'' and inserting
``subsection (g)''.
(12) Subparagraph (J) of section 6213(g)(2) of such Code is
amended by striking ``25A(g)(1)'' and inserting ``25A(f)(1)''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2013.
SEC. 3. EXPANSION OF PELL GRANT EXCLUSION FROM GROSS INCOME.
(a) In General.--Paragraph (1) of section 117(b) of the Internal
Revenue Code of 1986 is amended by striking ``received by an
individual'' and all that follows and inserting ``received by an
individual--
``(A) 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
``(B) as a Federal Pell Grant under section 401 of the
Higher Education Act of 1965 (20 U.S.C. 1070a) (as in effect on
the date of the enactment of this subparagraph).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2013.
SEC. 4. INCREASED PUBLIC AWARENESS OF AMERICAN OPPORTUNITY TAX CREDIT.
The Secretary of the Treasury, or the Secretary's delegate, in
consultation with the Secretary of Education, shall establish a
taxpayer awareness program to inform the taxpaying public of the
availability of the American Opportunity Tax Credit allowed under
section 25A of the Internal Revenue Code of 1986. Such public awareness
program shall be designed to assure that individuals who may be
eligible are informed of the availability of such credit and filing
procedures. The Secretary shall use appropriate means of communication
to carry out the provisions of this section. The taxpayer awareness
program shall include, but not be limited to, prominent display of
information about the availability of the American Opportunity Tax
Credit on information return forms specified by such Secretary for use
by educational institutions to report qualified tuition and related
expenses incurred.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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