I
111th CONGRESS
2d Session
H. R. 6033
IN THE HOUSE OF REPRESENTATIVES
July 30, 2010
Mr. Hall of New York 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 consolidate education tax benefits into one credit against income tax for higher education expenses.
Short title
This Act may be cited as the
Higher Education Affordability Act of
2010
.
Consolidation of education tax incentives into higher education tax credit
In general
Section 25A of the Internal Revenue Code of 1986 (relating to Hope and Lifetime Learning credits) is amended to read as follows:
Higher education tax credit
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 an amount equal so much of the higher education expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year with respect to each student for whom an election is in effect under this section for any taxable year) as does not exceed $3,000.
Limitations
Lifetime credit limitation
The amount of the credit allowed under subsection (a) for any taxable year with respect to any student shall not exceed the excess of—
$15,000, over
the aggregate credit allowed under subsection (a) with respect to such individual for all prior taxable years.
Credit limitation based on modified adjusted gross income
In general
The amount which would (but for this paragraph) be taken into account under subsection (a) for the taxable year shall be reduced (but not below $500) by the amount determined under subparagraph (B).
Amount of reduction
The amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as—
the excess of—
the taxpayer’s modified adjusted gross income for such taxable year, over
the applicable amount under subparagraph (D), bears to
$24,000 ($48,000 in the case of a joint return).
Modified adjusted gross income
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.
Applicable amount
The applicable amount under this subparagraph is—
in the case of a joint return, 200 percent of the dollar amount in effect under clause (ii) for the taxable year, and
in any other case, $80,000.
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 subsection (a) for the taxable year shall not exceed the excess of—
the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
the sum of the credits allowable under this subpart (other than this section and section 23) and section 27 for the taxable year.
Definitions
For purposes of this subsection—
Higher education expense
The term higher education expense means any expense of a type which is 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 section) of a student who is—
the taxpayer,
the taxpayer’s spouse, or
any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,
Eligible educational institution
The term eligible educational institution means an institution—
which is described in section 481 of the Higher Education Act of 1965, as in effect on the date of the enactment of the Taxpayer Relief Act of 1997, and
which is eligible to participate in a program under title IV of such Act.
Special rules
Identification requirement
No credit shall be allowed under subsection (a) to a taxpayer with respect to any individual unless the taxpayer includes the name and taxpayer identification number of such student on the return of tax for the taxable year.
Adjustment for certain scholarships
The amount of higher education expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsections (a) and (b)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as—
a qualified scholarship which is excludable from gross income under section 117,
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
a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such student’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.
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—
no credit shall be allowed under subsection (a) to such individual for such individual’s taxable year, and
higher education 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.
Treatment of certain prepayments
If higher education expense is 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.
Denial of double benefit
No credit shall be allowed under this section for any expense for which deduction is allowed under any other provision of this chapter.
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.
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.
Portion of credit refundable
The aggregate credits allowed to a taxpayer under subpart C shall be increased by 20 percent of the portion of the amount of the credit which would have been allowed to the taxpayer under this section without regard to this subsection and the limitation under section 26(a)(2) or subsection (b)(4), as the case may be. The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a)(2) or subsection (b)(3), as the case may be.
Election not To have section apply
A taxpayer may elect not to have this section apply with respect to the higher education expenses of an individual for any taxable year.
Inflation adjustment
In general
In the case of a taxable year beginning after 2011, the $3,000 and $15,000 amount in subsections (a) and (b)(1), respectively, shall each be increased by an amount equal to—
such dollar amount, multiplied by
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
2010
for calendar year 1992
in subparagraph (B)
thereof.
Rounding
If any amount as adjusted under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.
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 expense which was taken into account in determining the amount of such credit.
.
Elimination of 529 plan reduction for education credit
Clause (v) of section 529(c)(3)(B) of such Code is amended
by striking shall be reduced
and all that follows through the
period at the end and inserting the following shall be reduced as
provided in section 25A(g)(2).
.
Conforming amendments
Subparagraph (B)
of section 24(b)(3) of such Code is amended by striking 25A(i)
and inserting 25A
.
Clause (ii) of
section 25(e)(1)(C) of such Code is amended by striking 2A(i)
inserting 25A
.
Paragraph (2) of
section 25B(g) of such Code is amended by striking 25A(i)
and
inserting 25A
.
Paragraph (2) of
section 1400C(d) of such Code is amended by striking 25A(i)
and
inserting 25A
.
Section 62(a) of such Code is amended by striking paragraph (18).
Subparagraph (A)
of section 86(b)(2) of such Code is amended by striking ,
222
.
Subparagraph (B)
of section 72(t)(7) of such Code is amended by striking section
25A(g)(2)
and inserting section 25A(d)(2)
.
Subparagraph (A) of section 135(c)(4) of
such Code is amended by striking , 222
.
Subparagraph (A)
of section 137(b)(3) of such Code is amended by striking ,
222
.
Subparagraph (A)
of section 199(d)(2) of such Code is amended by striking ,
222
.
Clause (ii) of
section 219(g)(3)(A) of such Code is amended by striking ,
222
.
Clause (i) of
section 221(b)(2)(C) of such Code is amended by striking ,
222
.
Clause (iii) of
section 469(i)(3)(F) of such Code is amended by striking 221, and
222
and inserting and 221
.
Subsection (d) of section 221 of such Code is amended—
by striking
section 25A(g)(2)
in paragraph (2)(B) and inserting
section 25A(d)(2)
, and
by striking section
25A(f)(2)
in the second sentence of paragraph (2) and inserting
section 25A(c)(2)
.
Paragraph (3) of section 221(d) of such Code is amended to read as follows:
Eligible student
The term eligible student means, with respect to any academic period, a student who—
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 the Taxpayer Relief Act of 1997, and
is carrying at least 1⁄2 the normal full-time workload for the course of study the student is pursuing.
.
Subclause (I) of
section 529(c)(3)(B)(v) of such Code, as amended by this Act, is amended by
striking section 25A(g)(2)
and inserting
25A(d)(2)
.
Clause (i) of
section 529(e)(3)(B) of such Code is amended by striking section
25A(b)(3)
and inserting section 221(d)(3)
.
Subclause (I) of
section 530(d)(2)(C)(i) of such Code is amended by striking section
25A(g)(2)
and inserting section 25A(d)(2)
.
Clause (iii) of section 530(d)(4)(B) of
such Code is amended by striking section 25A(g)(2)
and inserting
25A(d)(2)
.
Section 1400O of such Code is amended by adding at the end the following flush sentence:
For purposes of this section, any reference to section 25A shall be treated as a reference to such section as in effect on the day before the date of the enactment of this sentence.
.
Subsection (e) of
section 6050S of such Code is amended by striking subsection
(g)(2)
and inserting subsection (d)(2)
.
Subparagraph (J)
of section 6213(g)(2) of such Code is amended by striking section
25A(g)(1) (relating to higher education tuition and related expenses)
and inserting section 25A(d)(1) (relating to higher education tax
credit)
.
Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting , 25A,
after
section 35
.
Effective date
The amendments made by this section shall apply to expenses paid after December 31, 2010, for education furnished in academic periods beginning after such date.