1.This Act may be cited as
the Universal Higher Education and
Lifetime Learning Act of 2007
.
2.Consolidation of
education tax incentives into higher education tax credit
(a)Section 25A of the Internal Revenue Code of 1986
(relating to Hope and Lifetime Learning credits) is amended to read as
follows:
25A.Higher
education tax credit
(a)In the case of any eligible student for whom an election
is in effect under this section for any taxable year, there shall be allowed as
a credit against the tax imposed by this chapter for the taxable year an amount
equal to the sum of—
(1)50 percent of so
much of the higher education expenses paid by the taxpayer during the taxable
year (with respect to attendance of the eligible student at an eligible
educational institution during any academic period beginning in such taxable
year) as does not exceed $3,000, and
(2)30 percent of so
much of such expenses as exceeds $3,000, but does not exceed $8,000.
(b)
(1)Higher education
expense limitationThe amount
of higher education expenses taken into account under subsection (a) with
respect to an individual for an academic period shall not exceed the
individual’s 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) for such period at the eligible educational institution with respect
to which such higher education expenses were paid.
(2)Lifetime credit
limitationThe amount of the credit allowed under subsection (a)
for any taxable year with respect to any eligible student shall not exceed the
excess of—
(A)$12,000,
over
(B)the aggregate
credit allowed under subsection (a) with respect to such eligible student for
all prior taxable years.
(3)Credit
limitation based on modified adjusted gross income
(A)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 zero) by the amount determined under subparagraph (B).
(B)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—
(i)the excess
of—
(I)the taxpayer’s
modified adjusted gross income for such taxable year, over
(II)the applicable
amount under subparagraph (D), bears to
(ii)$30,000 ($60,000
in the case of a joint return).
(C)Modified
adjusted gross incomeThe 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)The applicable amount under this subparagraph is—
(i)in
the case of a joint return, 200 percent of the dollar amount in effect under
clause (ii) for the taxable year, and
(ii)in any other
case, $50,000.
(4)Limitation based
on amount of taxIn 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—
(A)the sum of the
regular tax liability (as defined in section 26(b)) plus the tax imposed by
section 55, over
(B)the sum of the
credits allowable under this subpart (other than this section and section 23)
and section 27 for the taxable year.
(c)For
purposes of this subsection—
(1)The term eligible student means, with
respect to any academic period, any individual 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.
(2)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)the
taxpayer,
(B)the taxpayer’s
spouse, or
(C)any dependent of
the taxpayer with respect to whom the taxpayer is allowed a deduction under
section 151,
at an
eligible educational institution with respect to the attendance of such
individual at such institution for the academic period for which the credit
under this section is being determined.(3)Eligible
educational institutionThe 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 Taxpayer Relief Act of 1997, and
(B)which is eligible
to participate in a program under title IV of the Higher Education Act of
1965.
(d)
(1)Identification
requirementNo credit shall be allowed under subsection (a) to a
taxpayer with respect to an eligible student unless the taxpayer includes the
name and taxpayer identification number of such student on the return of tax
for the taxable year.
(2)Adjustment for
certain scholarshipsThe 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)a qualified
scholarship which is excludable from gross income under section 117,
(B)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
(C)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.
(3)Credit allowed
only for first 2 years of graduate educationNo credit shall be allowed under subsection
(a) for a taxable year with respect to the higher education expenses of an
eligible student if the student has completed (before the beginning of such
taxable year) 2 years of graduate education at one or more eligible educational
institutions.
(4)Treatment of
expenses paid by dependentIf 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 subsection (a) to such individual for such individual’s taxable
year, and
(B)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.
(5)Treatment of
certain prepaymentsIf higher education 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)No credit shall be allowed under this section for any
expense for which deduction is allowed under any other provision of this
chapter.
(7)No credit for
married individuals filing separate returnsIf 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)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)Portion of credit
refundableThe aggregate credits allowed to a taxpayer under
subpart C shall be increased by 50 percent of the portion of the amount of the
credit which would be 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.
(f)Election not To
have section applyA taxpayer
may elect not to have this section apply with respect to the higher education
expenses of an individual for any taxable year.
(g)
(1)In the case of a taxable year beginning after 2008, the
$50,000 amount in subsection (b)(3)(D) 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
2007
for calendar year 1992
in subparagraph (B)
thereof.
(2)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.
(h)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.
.
(b)Repeal of
deduction for qualified tuition and related expenses
(1)Part VII of subchapter B of chapter 1 of such Code
(relating to additional itemized deductions for individuals) is amended by
striking section 222.
(2)The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by striking the item relating to section
222.
(c)
(1)Subsection (c) of
section 23 of such Code is amended by striking and 1400C
and
inserting 25A, and 1400C
.
(2)Subparagraph (B) of
section 24(b)(3) of such Code is amended by striking and 25B
and
inserting , 25A, and 25B
.
(3)Subparagraph (C)
of section 25(e)(1) of such Code is amended—
(A)by striking
25D
in clause (i) and inserting 25A, 25D
,
and
(B)by striking
24
in clause (ii) and inserting 24, 25A
.
(4)Paragraph (2) of
section 25B(g) of such Code is amended by striking section 23
and inserting sections 23 and 25A
.
(5)Subsection (c) of
section 25D of such Code is amended—
(A)in paragraph (1)
by inserting and section 25A
after other than this
section
, and
(B)in paragraph (2)
by striking 24
and inserting 24, 25A
.
(6)Subsection (d) of
section 1400C of such Code is amended—
(A)by striking
section 25D
in paragraph (1) and inserting sections 25A
and 25D
, and
(B)by striking
24
in paragraph (2) and inserting 24, 25A
.
(7)Section 62(a) of
such Code is amended by striking paragraph (18).
(8)Subparagraph (A)
of section 86(b)(2) of such Code is amended by striking ,
222
.
(9)Subparagraph (B)
of section 72(t)(7) of such Code is amended by striking section
25A(g)(2)
and inserting section 25A(d)(2)
.
(10)Subparagraph (A) of section 135(c)(4) of
such Code is amended by striking , 222
.
(11)Subparagraph (A)
of section 137(b)(3) of such Code is amended by striking ,
222
.
(12)Subparagraph (A)
of section 199(d)(2) of such Code is amended by striking ,
222
.
(13)Clause (ii) of
section 219(g)(3)(A) of such Code is amended by striking ,
222
.
(14)Clause (i) of
section 221(b)(2)(C) of such Code is amended by striking ,
222
.
(15)Clause (iii) of
section 469(i)(3)(F) of such Code is amended by striking 221, and
222
and inserting and 221
.
(16)Subsection (d) of
section 221 of such Code is amended—
(A)by striking
section 25A(g)(2)
in paragraph (2)(B) and inserting
section 25A(d)(2)
, and
(B)by striking section
25A(f)(2)
in the second sentence of paragraph (2) and inserting
section 25A(c)(3)
.
(17)Paragraph (3) of section 221(d) of such
Code is amended to read as follows:
(3)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 the
date of the enactment of the Taxpayer Relief Act of 1997, and
(B)is carrying at least
1⁄2 the normal full-time workload for the course of study
the student is
pursuing.
.
(18)Subclause (I) of
section 529(c)(3)(B)(v) of such Code is amended by striking section
25A(g)(2)
and inserting 25A(d)(2)
.
(19)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)
.
(20)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)
.
(21)Clause (iii) of section 530(d)(4)(B) of
such Code is amended by striking section 25A(g)(2)
and inserting
25A(d)(2)
.
(22)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..
(23)Section 6050S of
such Code is amended—
(A)by striking
qualified tuition and related expenses
in subsection (a)(2) and
inserting expenses which are included as part of a student’s cost of
attendance (as defined in section 472 of the Higher Education Act of
1965)
,
(B)by striking clause
(i) of subsection (b)(2)(B) and inserting the following new clause:
(i)the cost of attendance (as defined in
section 472 of the Higher Education Act of 1965) of such
individual,
,
and
(C)in subsection (e)
by striking the terms
and all that follows through
subsection (g)(2) thereof)
and inserting the term
eligible educational institution
has the meaning given such term
by section 25A(c)(3)
.
(24)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)
.
(25)Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting , 25A,
after
section 35
.
(26)The table of
sections for subpart A of part IV of subchapter A of chapter 1 of such Code is
amended by striking the item relating to section 25A and inserting the
following:
Sec. 25A. Higher education tax
credit.
.
(d)The amendments made by this section shall apply to expenses
paid after December 31, 2007, for education furnished in academic periods
beginning after such date.