Amends the Internal Revenue Code to allow a nonrefundable individual income tax credit for the educational expenses (tuition and supplies) of the taxpayer, spouse, or dependents at an eligible private elementary or secondary school, institution of higher education, or vocational school. Limits the credit to $1,000 per student per year.
HR 390 IH 101st CONGRESS 1st Session H. R. 390 To amend the Internal Revenue Code of 1986 to provide a Federal income tax credit for tuition. IN THE HOUSE OF REPRESENTATIVES January 3, 1989 Mr. SOLOMON 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 provide a Federal income tax credit for tuition. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25 the following new section: `SEC. 25A. TUITION TAX CREDIT. `(a) GENERAL RULE- 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, determined under subsection (b), of the educational expenses paid by him during the taxable year to one or more eligible educational institutions for himself, his spouse, or any of his dependents (as defined in section 152). `(b) LIMITATIONS- `(1) AMOUNT PER INDIVIDUAL- The credit under subsection (a) for the educational expenses of any individual paid in any taxable year shall be equal to so much of such expenses paid with respect to such individual as does not exceed $1,000. `(2) PRORATION OF CREDIT WHERE MORE THAN ONE TAXPAYER PAYS EXPENSES- If educational expenses of an individual are paid by more than one taxpayer during any calendar year, the credit allowable to each such taxpayer under subsection (a) for any taxable year beginning in such calendar year shall be the same portion of the credit determined under paragraph (1) for such calendar year which the amount of educational expenses of such individual paid by the taxpayer during such calendar year is of the total amount of educational expenses of such individual paid during such calendar year by all such taxpayers. `(c) DEFINITIONS- For purposes of this section-- `(1) EDUCATIONAL EXPENSES- The term `educational expenses' means amounts paid for-- `(A) tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and `(B) fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution. Such term does not include any amount paid, directly or indirectly, for meals, lodging, or similar personal, living, or family expenses. In the event an amount paid for tuition or fees includes an amount for meals, lodging, or similar expenses which is not separately stated, the portion of such amount which is attributable to meals, lodging, or similar expenses shall be determined under regulations prescribed by the Secretary. `(2) ELIGIBLE EDUCATIONAL INSTITUTION- The term `eligible educational institution' means-- `(A) an institution of higher education, `(B) a vocational school, `(C) a secondary school, or `(D) an elementary school. `(3) INSTITUTION OF HIGHER EDUCATION- The term `institution of higher education' means the institutions described in section 1201(a) or 481(a) of the Higher Education Act of 1965. `(4) VOCATIONAL SCHOOL- The term `vocational school' means an area vocational education school as defined in section 521(3) of the Carl D. Perkins Vocational Education Act. `(5) ELEMENTARY AND SECONDARY SCHOOLS- The terms `elementary school' and `secondary school' mean, respectively, any elementary or secondary school (as defined in paragraph (7) of section 198(a) of the Elementary and Secondary Education Act of 1965) which is privately operated but only if it is-- `(A) accredited or approved under State law (or, in the case of school in a State which has no procedure for the accreditation or approval of privately operated schools, which meets the requirements of State law relating to compulsory school attendance), and `(B) exempt from taxation under section 501(a) as an organization described in section 501(c)(3). The terms `elementary school' and `secondary school' include facilities which offer education for individuals who are physically or mentally handicapped as a substitute for public elementary or secondary education. `(d) SPECIAL RULES- `(1) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS BENEFITS- The amounts otherwise taken into account under subsection (a) as educational expenses of any individual during any period shall be reduced (before the application of subsection (b)) by any amounts received by such individual during such period as-- `(A) a qualified scholarship (within the meaning of section 117(b)) which under section 117 is not includible in gross income, or `(B) an educational assistance allowance under chapters 32, 34, or 35 of title 38 of the United States Code. `(2) ELIGIBLE COURSES- Amounts paid for educational expenses of any individual shall be taken into account under subsection (a) only to the extent such expenses-- `(A) are attributable to courses of instruction offered by an elementary or secondary school, or `(B) are attributable to courses of instruction for which credit is allowed toward a baccalaureate degree by an institution of higher education or toward a certificate of required course work at a vocational school and are not attributable to any graduate program of such individual. `(3) INDIVIDUAL MUST BE AT LEAST HALF-TIME STUDENT- No credit shall be allowed under subsection (a) for amounts paid during the taxable year for educational expenses with respect to any individual unless that individual, during any 4 calendar months during the calendar year in which the taxable year of the taxpayer begins, is at least a half-time student at an eligible education institution. `(4) SPOUSE- No credit shall be allowed under subsection (a) for amounts paid during the taxable year for educational expenses for the spouse of the taxpayer unless-- `(A) the taxpayer is entitled to an exemption for his spouse under section 151(b) for the taxable year, or `(B) the taxpayer files a joint return with his spouse for the taxable year. `(e) DISALLOWANCE OF EXPENSES AS DEDUCTION- No deduction shall be allowed under section 162 (relating to trade or business expenses) for any educational expense which (after the application of subsection (b)) is taken into account in determining the amount of any credit allowed under subsection (a). The preceding sentence shall not apply to the educational expenses of any taxpayer who, under regulations prescribed by the Secretary, elects not to apply the provisions of this section with respect to such expenses for the taxable year. `(f) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section.' (b) The table of sections for such subpart A is amended by inserting after the item relating to section 25 the following new item: `Sec. 25A. Expenses of higher education.' (c) The amendments made by this section shall apply to taxable years beginning after December 31, 1989.
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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