1.This Act may be cited as the
Middle Class College Tuition Tax
Credit Expansion Act of 2009
.
2.Qualified tuition and
related expenses 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.Qualified
tuition and related expenses credit
(a)In the case of any eligible individual for whom an
election is in effect under this section, there shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an amount equal to
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
individual during any academic period beginning in such taxable year) as does
not exceed $10,000.
(b)
(1)Modified
adjusted gross income limitation
(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 paragraph (2).
(B)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—
(i)the excess
of—
(I)the taxpayer's
modified adjusted gross income for such taxable year, over
(II)the applicable
amount under paragraph (4), bears to
(ii)$5,000 ($10,000
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 subparagraph (B)
for the taxable year, and
(ii)in any other
case, $100,000.
(2)Credit allowed
for only 4 taxable yearsAn election to have this section apply
with respect to any eligible individual may not be made for any taxable year if
such an election (by the taxpayer or any other individual) is in effect with
respect to such individual for any 4 prior taxable years.
(c)For
purposes of this section—
(1)The term eligible individual means any
individual described in paragraph (2).
(2)Qualified
tuition and related expenses
(A)The term qualified tuition and related
expenses means tuition and fees required for the enrollment or
attendance of —
(i)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)Such
term shall include books required for such individual's academic courses of
instruction at the eligible educational institution.
(C)Exception for
education involving sports, etcSuch 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.
(D)Exception for
nonacademic feesSuch term does not include student activity
fees, athletic fees, insurance expenses, or other expenses unrelated to an
individual's academic course of instruction.
(3)Eligible
educational institutionTher 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 qualified tuition and related
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)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)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.
(4)Treatment of
certain prepaymentsif 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.
(5)No credit shall be allowed under this section for
any expense for which deduction is allowed under any other provision of this
chapter.
(6)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.
(7)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)
(1)In the case of a taxable year beginning after 2009, the
$100,000 amount in subsection (b)(1)(D)(ii) 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 2008
for calendar year 1992
in
subparagraph (B) thereof.
(2)If
any amount as adjusted under paragraph (1) is not a multiple of $1,000, such
amount shall be rounded to the next lowest multiple of $1,000.
(f)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 ExpensesPart VII of
subchapter B of chapter 1 of such Code (relating to additional itemized
deductions for individuals) is amended by striking section 222.
(c)(1)Section 62(a) of such
Code is amended by striking paragraph (18).
(2)Subparagraph (A) of section 86(b)(2)
of such Code is amended by striking , 222
.
(3)Subparagraph (B) of section 72(t)(7)
of such Code is amended by striking section 25A(g)(2)
and
inserting section 25A(d)(2)
.
(4)Subparagraph (A) of section 135(c)(4)
of such Code is amended by striking , 222
.
(5)Subparagraph (A) of section 137(b)(3)
of such Code is amended by striking , 222
.
(6)Subparagraph (A) of section 199(d)(2)
of such Code is amended by striking , 222
.
(7)Clause (ii) of section 219(g)(3)(A)
of such Code is amended by striking , 222
.
(8)Clause (i) of section 221(b)(2)(C) of
such Code is amended by striking , 222
.
(9)Clause (iii) of section 469(i)(3)(F)
of such Code is amended by striking 221, and 222
and inserting
and 221
.
(10)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)
.
(11)Paragarph (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 ½ the normal full-time workload for the course of study the student is
pursuing.
.
(12)Subclause (I) of section
529(c)(3)(B)(v) of such Code is amended by striking section
25A(g)(2)
and inserting section 25A(d)(2)
.
(13)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)
.
(14)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)
.
(15)Clause (iii) of section 530(d)(4)(B)
of such Code is amended by striking section 25A(g)(2)
and
inserting section 25A(d)(2)
.
(16)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..
(17)Subparagraph (J) of section
6213(g)(2) of such Code is amended by striking section 25A(g)(1)
and inserting section 25A(d)(1)
.
(d)(1)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:
25A. Qualified tuition and
related expenses
credit.
.
(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.
(e)The amendments made by this section shall apply to expenses
paid after December 31, 2009, for education furnished in academic periods
beginning after such date.