American Opportunity Tax Credit Permanence and Consolidation 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: (1) allows an income tax credit of up to $3,000 of the qualified tuition and related expenses of a student who is carrying at least one half of a normal course load, (2) increases the income threshold for reductions in the credit amount based upon modified adjusted gross income, (3) allows a lifetime dollar limitation on such credit of $15,000 for all taxable years, and (4) makes 40% of the credit refundable. Allows an exclusion from gross income of any amount received as a Federal Pell Grant.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 835 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 835
To amend the Internal Revenue Code of 1986 to extend and modify the
American Opportunity Tax Credit, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 25, 2013
Mr. Schumer (for himself, Mr. Menendez, Ms. Stabenow, Mr. Rockefeller,
Mr. Brown, Mr. Cardin, Mr. Whitehouse, and Mr. Durbin) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to extend and modify 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 ``American Opportunity Tax Credit
Permanence and Consolidation Act of 2013''.
SEC. 2. EXTENSION AND MODIFICATION OF AMERICAN OPPORTUNITY TAX CREDIT.
(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 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 under subsection (b) with respect to such
individual.
``(b) Amount of Credit.--
``(1) Student enrolled at least \1/2\ time.--In the case of
an eligible student who is carrying at least \1/2\ the 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 $6,000.
``(2) Other students.--In the case of an eligible student
not described in paragraph (1), the amount determined under
this subsection with respect to such individual is 30 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 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 ($160,000 in the case of a
joint return), bears to
``(B) $20,000 ($40,000 in the case of a joint
return).
``(3) Modified adjusted gross income.--For purposes of this
paragraph, 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 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 individual,
the aggregate amount of the credits claimed under this section
for all taxable years shall not exceed $15,000, determined
without regard to whether--
``(A) such credits are claimed on the return of tax
filed by the individual or by another taxpayer, or
``(B) such expenses are treated as paid by the
individual or by another taxpayer.
``(2) Reporting.--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 of subsections (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 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 the
American Opportunity Tax Credit Permanence and
Consolidation 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 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.
``(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 of section 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 under subsection (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 term `eligible student' means,
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 of section 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 Permanence and Consolidation Act of 2013.
``(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.
``(D) Computer technology and equipment.--Such term
includes expenses for the purchase of computer
technology or equipment (as defined in section
170(e)(6)(F)(i)), or Internet access and related
services, only to the extent the purchase of such
technology, equipment, or services is specifically
required by the individual's academic course of
instruction or degree program.
``(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 the date
of the enactment of the American Opportunity Tax Credit
Permanence and Consolidation Act of 2013, and
``(B) which is eligible to participate in a program
under title IV of such Act.
``(g) Portion of Credit Refundable.--Forty percent of the credit
allowed under this section (determined after application of subsections
(c)(1) and (d) and without regard to this subsection and section
26(a)(2) or subsection (c)(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 whom subsection (g) of
section 1 applies for such taxable year.
``(h) 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.''.
(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 the Internal Revenue Code of 1986 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(d)(3)''.
(2) Paragraph (2) of section 221(d) of such Code is
amended--
(A) by striking ``25A(g)(2)'' in subparagraph (B)
and inserting ``25A(d)(3)'', and
(B) by striking ``25A(f)(2)'' and inserting
``25A(f)(3)''.
(3) Paragraph (3) of section 221(d) of such Code is amended
by striking ``25A(b)(3)'' and inserting ``25A(f)(1) (but only
with respect to a student who is carrying at least \1/2\ the
normal full-time workload for the course of study the student
is pursuing)''.
(4) Paragraph (1) of section 222(d) of such Code is
amended--
(A) by striking ``25A(f)'' and inserting
``25A(f)(2)'', and
(B) by striking ``25A(g)(2)'' and inserting
``25A(d)(3)''.
(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(d)(3)'', and
(B) by striking ``Hope and lifetime learning
credits'' in the heading and inserting ``American
opportunity credit''.
(6) Clause (i) of section 529(e)(3)(B) of such Code is
amended by striking ``25A(b)(3)'' and inserting ``25A(f)(1)
(but only with respect to a student who is carrying at least
\1/2\ the normal full-time workload for the course of study the
student is pursuing)''.
(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(d)(3)'', and
(B) by striking ``Hope and lifetime learning
credits'' in the heading and inserting ``American
opportunity credit''.
(8) Clause (iii) of section 530(d)(4)(B) of such Code is
amended by striking ``25A(g)(2)'' and inserting ``25A(d)(3)''.
(9) Section 1400O of such Code is amended--
(A) by striking ``25A(f)(2)'' and inserting
``25A(f)(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 (d)(3)''.
(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(d)(2)''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2012.
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--
``(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 under section 401 of the
Higher Education Act of 1965 (as in effect on the date of the
enactment of the American Opportunity Tax Credit Permanence and
Consolidation Act of 2013).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2012.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line