[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3393 Engrossed in House (EH)]

113th CONGRESS
  2d Session
                                H. R. 3393

_______________________________________________________________________

                                 AN ACT


 
 To amend the Internal Revenue Code of 1986 to consolidate certain tax 
 benefits for educational expenses, to amend the Internal Revenue Code 
  of 1986 to make improvements to the child tax credit, and for other 
                               purposes.

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

SECTION 1. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Table of Contents.
           TITLE I--STUDENT AND FAMILY TAX SIMPLIFICATION ACT

Sec. 101. Short title.
Sec. 102. Consolidation of certain tax benefits for educational 
                            expenses.
Sec. 103. Expansion of Pell Grant exclusion from gross income.
Sec. 104. Budgetary effects.
               TITLE II--CHILD TAX CREDIT IMPROVEMENT ACT

Sec. 201. Short title.
Sec. 202. Elimination of marriage penalty in child tax credit; 
                            inflation adjustment of credit amount and 
                            phaseout thresholds in child tax credit.
Sec. 203. Social security number required to claim the refundable 
                            portion of the child tax credit.
Sec. 204. Budgetary effects.

           TITLE I--STUDENT AND FAMILY TAX SIMPLIFICATION ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Student and Family Tax 
Simplification Act''.

SEC. 102. CONSOLIDATION OF CERTAIN TAX BENEFITS FOR EDUCATIONAL 
              EXPENSES.

    (a) American Opportunity Tax Credit.--Section 25A of the Internal 
Revenue Code of 1986 is amended to read as follows:

``SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year, with respect to each eligible student, an amount equal to 
the sum of--
            ``(1) 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 $2,000, plus
            ``(2) 25 percent of so much of such expenses so paid as 
        exceeds the dollar amount in effect under paragraph (1) but 
        does not exceed twice such dollar amount.
    ``(b) Portion of Credit Refundable.--So much of the credit 
allowable under subsection (a) with respect to each eligible student 
(determined without regard to this subsection and section 26(a) and 
after application of all other provisions of this section) as does not 
exceed $1,500 shall be treated as a credit allowable under subpart C 
(and not under this part). The preceding sentence shall not apply to 
any taxpayer for any taxable year if such taxpayer is a child to whom 
section 1(g) applies for such taxable year.
    ``(c) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) for any taxable year shall be reduced (but not 
        below zero) by an amount which bears the same ratio to the 
        amount so allowable (determined without regard to this 
        subsection and subsection (b) but after application of all 
        other provisions of this section) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) $80,000 (twice such amount in the 
                        case of a joint return), bears to
                    ``(B) $10,000 (twice such amount in the case of a 
                joint return).
            ``(2) Modified adjusted gross income.--For purposes of this 
        subsection, 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.
    ``(d) Other Limitations.--No credit shall be allowed under this 
section with respect to any eligible student for any taxable year if--
            ``(1) such student was taken into account in determining 
        the credit allowed under this section (by the taxpayer or any 
        other individual) for any 4 prior taxable years, or
            ``(2) such student has completed (before the beginning of 
        such taxable year) the first 4 years of postsecondary education 
        at an eligible educational institution.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Eligible student.--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 August 5, 1997, and
                    ``(B) is carrying at least \1/2\ the normal full-
                time work load for the course of study the student is 
                pursuing.
            ``(2) Qualified tuition and related expenses.--
                    ``(A) In general.--The term `qualified tuition and 
                related expenses' means tuition, fees, and course 
                materials, required for enrollment or attendance of--
                            ``(i) the 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) 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.
                    ``(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.
            ``(3) Eligible educational institution.--The term `eligible 
        educational institution' means an institution--
                    ``(A) which is described in section 481 of the 
                Higher Education Act of 1965 (20 U.S.C. 1088), as in 
                effect on August 5, 1997, and
                    ``(B) which is eligible to participate in a program 
                under title IV of such Act.
    ``(f) Special Rules.--
            ``(1) Identification requirement.--No credit shall be 
        allowed under subsection (a) to a taxpayer with respect to the 
        qualified tuition and related expenses of an individual unless 
        the taxpayer includes the name and taxpayer identification 
        number of such individual, and the employer identification 
        number of any institution to which such expenses were paid, on 
        the return of tax for the taxable year.
            ``(2) Adjustment for certain scholarships, etc.--
                    ``(A) In general.--The 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 subsection (c)) by the sum of any 
                amounts paid for the benefit of such individual which 
                are allocable to such period as--
                            ``(i) a qualified scholarship which is 
                        excludable from gross income under section 117,
                            ``(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, and
                            ``(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.
                    ``(B) Coordination with pell grants not used for 
                qualified tuition and related expenses.--For purposes 
                of subparagraph (A), the amount of any Federal Pell 
                Grant under section 401 of the Higher Education Act of 
                1965 (20 U.S.C. 1070a) shall be reduced (but not below 
                zero) by the amount of 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 this 
                paragraph) of such individual at an eligible 
                educational institution for the academic period for 
                which the credit under this section is being 
                determined.
            ``(3) 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--
                    ``(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 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.
            ``(5) Denial of double benefit.--No credit shall be allowed 
        under this section for any amount for which a deduction is 
        allowed under any other provision of this chapter.
            ``(6) 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.
            ``(7) 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.
    ``(g) Inflation Adjustment.--
            ``(1) In general.--In the case of a taxable year beginning 
        after 2018, the $2,000 amount in subsection (a)(1), the $1,500 
        amount in subsection (b), and the $80,000 amount in subsection 
        (c)(1)(A)(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 2017' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $100 ($1,000 in the case of the amount 
        in subsection (c)(1)(A)(ii)), such amount shall be rounded to 
        the next lowest multiple of $100 ($1,000 in the case of the 
        amount in subsection (c)(1)(A)(ii)).
    ``(h) Regulations.--The Secretary may prescribe such regulations or 
other guidance 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.''.
    (b) Requirement To Report Tuition Paid Rather Than Tuition 
Billed.--Section 6050S(b)(2)(B)(i) is amended by striking ``or the 
aggregate amount billed''.
    (c) Repeal of Deduction for Qualified Tuition and Related 
Expenses.--Part VII of subchapter B of chapter 1 of such Code is 
amended by striking section 222 (and by striking the item relating to 
such section in the table of sections for such part).
    (d) Conforming Amendments.--
            (1) Section 62(a) of such Code is amended by striking 
        paragraph (18).
            (2) Section 72(t)(7)(B) of such Code is amended by striking 
        ``section 25A(g)(2)'' and inserting ``section 25A(f)(2)''.
            (3) Sections 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), 
        199(d)(2)(A), 219(g)(3)(A)(ii), and 221(b)(2)(C)(i) of such 
        Code are each amended by striking ``222,''.
            (4) Section 469(i)(3)(F)(iii) of such Code is amended by 
        striking ``221, and 222'' and inserting ``and 221''.
            (5) Section 529(c)(3)(B)(v)(I) of such Code is amended by 
        striking ``section 25A(g)(2)'' and inserting ``section 
        25A(f)(2)''.
            (6) Section 529(e)(3)(B)(i) of such Code is amended by 
        striking ``section 25A(b)(3)'' and inserting ``section 
        25A(d)''.
            (7) Section 530(d)(2)(C) of such Code is amended--
                    (A) by striking ``section 25A(g)(2)'' in clause 
                (i)(I) and inserting ``section 25A(f)(2)'', and
                    (B) by striking ``Hope and lifetime learning 
                credits'' in the heading and inserting ``American 
                opportunity tax credit''.
            (8) Section 530(d)(4)(B)(iii) of such Code is amended by 
        striking ``section 25A(g)(2)'' and inserting ``section 
        25A(d)(4)(B)''.
            (9) Section 6050S(e) of such Code is amended by striking 
        ``subsection (g)(2)'' and inserting ``subsection (f)(2)''.
            (10) Section 6211(b)(4)(A) of such Code is amended by 
        striking ``subsection (i)(6)'' and inserting ``subsection 
        (b)''.
            (11) Section 6213(g)(2)(J) of such Code is amended by 
        striking ``TIN required under section 25A(g)(1)'' and inserting 
        ``TIN, and employer identification number, required under 
        section 25A(f)(1)''.
            (12) Section 1004(c) of division B of the American Recovery 
        and Reinvestment Tax Act of 2009 is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``section 25A(i)(6)'' each 
                        place it appears and inserting ``section 
                        25A(b)'',
                            (ii) by striking ``with respect to taxable 
                        years beginning after 2008 and before 2018'' in 
                        subparagraph (A) and inserting ``with respect 
                        to each taxable year'', and
                            (iii) by striking ``for taxable years 
                        beginning after 2008 and before 2018'' in 
                        subparagraph (B) and inserting ``for each 
                        taxable year'',
                    (B) in paragraph (2), by striking ``Section 
                25A(i)(6)'' and inserting ``Section 25A(b)'', and
                    (C) in paragraph (3)(C), by striking ``subsection 
                (i)(6)'' and inserting ``subsection (b)''.
            (13) 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 by striking the item relating to section 25A and 
        inserting the following new item:

``Sec. 25A. American opportunity tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 103. 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--
            (1) by striking the period at the end and inserting ``, 
        or'',
            (2) by striking ``received by an individual as a 
        scholarship'' and inserting the following: ``received by an 
        individual--
                    ``(A) as a scholarship'', and
            (3) by adding at the end the following new subparagraph:
                    ``(B) as a Federal Pell Grant under section 401 of 
                the Higher Education Act of 1965 (20 U.S.C. 1070a).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 104. BUDGETARY EFFECTS.

    (a) Statutory Pay-As-You-Go Scorecards.--The budgetary effects of 
this Act shall not be entered on either PAYGO scorecard maintained 
pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
    (b) Senate PAYGO Scorecards.--The budgetary effects of this Act 
shall not be entered on any PAYGO scorecard maintained for purposes of 
section 201 of S. Con. Res. 21 (110th Congress).

               TITLE II--CHILD TAX CREDIT IMPROVEMENT ACT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Child Tax Credit Improvement Act 
of 2014''.

SEC. 202. ELIMINATION OF MARRIAGE PENALTY IN CHILD TAX CREDIT; 
              INFLATION ADJUSTMENT OF CREDIT AMOUNT AND PHASEOUT 
              THRESHOLDS IN CHILD TAX CREDIT.

    (a) Elimination of Marriage Penalty.--Section 24(b)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``means--'' and 
all that follows and inserting ``means $75,000 (twice such amount in 
the case of a joint return).''.
    (b) Inflation Adjustment of Credit Amount and Phaseout 
Thresholds.--Section 24 of such Code is amended by adding at the end 
the following new subsection:
    ``(g) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2014, the $1,000 amount in subsection (a) and 
        the $75,000 amount in subsection (b)(2) 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 2013' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--Any increase determined under paragraph 
        (1) shall be rounded--
                    ``(A) in the case of the $1,000 amount in 
                subsection (a), to the nearest multiple of $50, and
                    ``(B) in the case of the $75,000 amount in 
                subsection (b)(2), to the nearest multiple of 
                $1,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 203. SOCIAL SECURITY NUMBER REQUIRED TO CLAIM THE REFUNDABLE 
              PORTION OF THE CHILD TAX CREDIT.

    (a) In General.--Subsection (d) of section 24 of the Internal 
Revenue Code of 1986 is amended by inserting after paragraph (4) the 
following new paragraph:
            ``(5) Identification requirement with respect to 
        taxpayer.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any taxpayer for any taxable year unless the taxpayer 
                includes the taxpayer's social security number on the 
                return of tax for such taxable year.
                    ``(B) Joint returns.--In the case of a joint 
                return, the requirement of subparagraph (A) shall be 
                treated as met if the social security number of either 
                spouse is included on such return.''.
    (b) Omission Treated as Mathematical or Clerical Error.--
Subparagraph (I) of section 6213(g)(2) of such Code is amended to read 
as follows:
                    ``(I) an omission of a correct social security 
                number required under section 24(d)(5) (relating to 
                refundable portion of child tax credit), or a correct 
                TIN required under section 24(e) (relating to child tax 
                credit), to be included on a return,''.
    (c) Conforming Amendment.--Subsection (e) of section 24 of such 
Code is amended by inserting ``With Respect to Qualifying Children'' 
after ``Identification Requirement'' in the heading thereof.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 204. BUDGETARY EFFECTS.

    (a) Statutory Pay-As-You-Go Scorecards.--The budgetary effects of 
this Act shall not be entered on either PAYGO scorecard maintained 
pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
    (b) Senate PAYGO Scorecards.--The budgetary effects of this Act 
shall not be entered on any PAYGO scorecard maintained for purposes of 
section 201 of S. Con. Res. 21 (110th Congress).

            Passed the House of Representatives July 24, 2014.

            Attest:

                                                                 Clerk.
113th CONGRESS

  2d Session

                               H. R. 3393

_______________________________________________________________________

                                 AN ACT

 To amend the Internal Revenue Code of 1986 to consolidate certain tax 
 benefits for educational expenses, to amend the Internal Revenue Code 
  of 1986 to make improvements to the child tax credit, and for other 
                               purposes.