HR 6522 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

2d SessionCommentsClose CommentsPermalink

H. R. 6522CommentsClose CommentsPermalink

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

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

September 21, 2012CommentsClose CommentsPermalink

Mr. ISRAEL introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

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

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Middle Class College Tuition Tax Credit Expansion Act of 2012’.CommentsClose CommentsPermalink

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:CommentsClose CommentsPermalink

‘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.CommentsClose CommentsPermalink





‘(b) Amount of Credit-CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(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 $2,500, plusCommentsClose CommentsPermalink





‘(B) 50 percent of such expenses so paid as exceeds $2,500 but does not exceed $7,500.CommentsClose CommentsPermalink





‘(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 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 student during any academic period beginning in such taxable year) as does not exceed $10,000.CommentsClose CommentsPermalink





‘(c) Dollar Limitations-CommentsClose CommentsPermalink





‘(1) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-CommentsClose CommentsPermalink





‘(A) 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).CommentsClose CommentsPermalink





‘(B) 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--CommentsClose CommentsPermalink





‘(i) the excess of--CommentsClose CommentsPermalink





‘(I) the taxpayer’s modified adjusted gross income for such taxable year, overCommentsClose CommentsPermalink





‘(II) $160,000 (twice such amount in the case of a joint return), bears toCommentsClose CommentsPermalink





‘(ii) $20,000 ($40,000 in the case of a joint return).CommentsClose CommentsPermalink





‘(C) 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.CommentsClose CommentsPermalink





‘(D) INFLATION ADJUSTMENT- In the case of any taxable year beginning after 2012, the $160,000 amount in subparagraph (B)(i)(II) shall be increased by an amount equal to--CommentsClose CommentsPermalink





‘(i) such dollar amount, multiplied byCommentsClose CommentsPermalink





‘(ii) 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 2011’ for ‘calendar year 1992’ in subparagraph (B) thereof.CommentsClose CommentsPermalink





Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $1,000.CommentsClose CommentsPermalink





‘(2) LIMITATION BASED ON AMOUNT OF TAX- In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under this section shall not exceed the excess of--CommentsClose CommentsPermalink





‘(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, overCommentsClose CommentsPermalink





‘(B) the sum of the credits allowable under this subpart (other than this subsection and sections 23, 25D, and 30D) and section 27 for the taxable year.CommentsClose CommentsPermalink





‘(d) Other Limitations and Special Rules- For purposes of this section:CommentsClose CommentsPermalink





‘(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 $25,000, determined without regard to whether--CommentsClose CommentsPermalink





‘(A) such credits are claimed on the return of tax filed by the individual or by another taxpayer, orCommentsClose CommentsPermalink





‘(B) such expenses are treated as paid by the individual or by another taxpayer.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(3) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS, ETC-CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(i) a qualified scholarship which is excludable from gross income under section 117,CommentsClose CommentsPermalink





‘(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, andCommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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 Middle Class College Tuition Tax Credit Expansion Act of 2012) of such individual at an eligible educational institution for the academic period for which the credit under this section is being determined.CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(A) no credit shall be allowed under this section to such individual for such individual’s taxable year, andCommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(f) Definitions- For purposes of this section:CommentsClose CommentsPermalink





‘(1) ELIGIBLE STUDENT- The term ‘eligible student’ means, with respect to any taxable year, an individual who--CommentsClose CommentsPermalink





‘(A) is enrolled for at least one academic period which begins during such taxable year at an eligible educational institution, andCommentsClose CommentsPermalink





‘(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 Middle Class College Tuition Tax Credit Expansion Act of 2012.CommentsClose CommentsPermalink





‘(2) QUALIFIED TUITION AND RELATED EXPENSES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘qualified tuition and related expenses’ means tuition, fees, and course materials required for the enrollment or attendance of--CommentsClose CommentsPermalink





‘(i) the taxpayer,CommentsClose CommentsPermalink





‘(ii) the taxpayer’s spouse, orCommentsClose CommentsPermalink





‘(iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,CommentsClose CommentsPermalink





at an eligible educational institution for courses of instruction of such individual at such institution.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(3) ELIGIBLE EDUCATIONAL INSTITUTION- The term ‘eligible educational institution’ means an institution--CommentsClose CommentsPermalink





‘(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 Middle Class College Tuition Tax Credit Expansion Act of 2012, andCommentsClose CommentsPermalink





‘(B) which is eligible to participate in a program under title IV of such Act.CommentsClose CommentsPermalink





‘(g) Portion of Credit Refundable- Fifty 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.CommentsClose CommentsPermalink





‘(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.’.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘Sec. 25A. American Opportunity Tax Credit.’.CommentsClose CommentsPermalink





(c) Conforming Amendments-CommentsClose CommentsPermalink





(1) Subparagraph (B) of section 24(b)(3) of the Internal Revenue Code of 1986 is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(2) Clause (ii) of section 25(e)(1)(C) of such Code is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(3) Paragraph (2) of section 25B(g) of such Code is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(4) Paragraph (1) of section 26(a) of such Code is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(5) Subparagraph (B) of section 72(t)(7) of such Code is amended by striking ‘25A(g)(2)’ and inserting ‘25A(d)(3)’.CommentsClose CommentsPermalink





(6) Paragraph (2) of section 221(d) of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘25A(g)(2)’ in subparagraph (B) and inserting ‘25A(d)(3)’, andCommentsClose CommentsPermalink





(B) by striking ‘25A(f)(2)’ and inserting ‘25A(f)(3)’.CommentsClose CommentsPermalink





(7) 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)’.CommentsClose CommentsPermalink





(8) Paragraph (1) of section 222(d) of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘25A(f)’ and inserting ‘25A(f)(2)’, andCommentsClose CommentsPermalink





(B) by striking ‘25A(g)(2)’ and inserting ‘25A(d)(3)’.CommentsClose CommentsPermalink





(9) Clause (v) of section 529(c)(3)(B) of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘25A(g)(2)’ in subclause (I) and inserting ‘25A(d)(3)’, andCommentsClose CommentsPermalink





(B) by striking ‘HOPE AND LIFETIME LEARNING CREDITS’ in the heading and inserting ‘AMERICAN OPPORTUNITY CREDIT’.CommentsClose CommentsPermalink





(10) 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)’.CommentsClose CommentsPermalink





(11) Subparagraph (C) of section 530(d)(2) of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘25A(g)(2)’ in clause (i)(I) and inserting ‘25A(d)(3)’, andCommentsClose CommentsPermalink





(B) by striking ‘HOPE AND LIFETIME LEARNING CREDITS’ in the heading and inserting ‘AMERICAN OPPORTUNITY CREDIT’.CommentsClose CommentsPermalink





(12) Clause (iii) of section 530(d)(4)(B) of such Code is amended by striking ‘25A(g)(2)’ and inserting ‘25A(d)(3)’.CommentsClose CommentsPermalink





(13) Subsection (i) of section 904 of such Code is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(14) Paragraph (2) of section 1400C(d) of such Code is amended by striking ‘25A(i)’ and inserting ‘25A’.CommentsClose CommentsPermalink





(15) Section 1400O of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘25A(f)(2)’ and inserting ‘25A(f)(3)’,CommentsClose CommentsPermalink





(B) by inserting ‘(as in effect on the date of the enactment of this section)’ after ‘25A(b)(1)’ in paragraph (2), andCommentsClose CommentsPermalink





(C) by inserting ‘(as in effect on the date of the enactment of this section)’ after ‘25A(c)(1)’ in paragraph (3).CommentsClose CommentsPermalink





(16) Subsection (e) of section 6050S of such Code is amended by striking ‘subsection (g)(2)’ and inserting ‘subsection (d)(3)’.CommentsClose CommentsPermalink





(17) Subparagraph (A) of section 6211(b)(4) of such Code is amended by striking ‘subsection (i)(6)’ and inserting ‘subsection (g)’.CommentsClose CommentsPermalink





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





(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2011.CommentsClose CommentsPermalink

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--CommentsClose CommentsPermalink





‘(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, orCommentsClose CommentsPermalink





‘(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 Middle Class College Tuition Tax Credit Expansion Act of 2012).’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2011.CommentsClose CommentsPermalink