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

113th CONGRESS
  1st Session
                                H. R. 3393

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 30, 2013

Mrs. Black (for herself and Mr. Danny K. Davis of Illinois) 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 certain tax 
       benefits for educational expenses, 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. SHORT TITLE.

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

SEC. 2. 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 any individual for any taxable 
year, there shall be allowed as a credit against the tax imposed by 
this chapter for such taxable year 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 any eligible student for whom an 
        election is in effect under this section for such taxable year 
        during any academic period beginning in such taxable year) as 
        does not exceed $2,000, plus
            ``(2) 25 percent 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) (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 allowable under 
subsection (a)). The preceding sentence shall not apply to any taxpayer 
for any taxable year if such taxpayer is a child to whom section 1(d) 
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) $43,000 (twice such amount in the 
                        case of a joint return), bears to
                    ``(B) $20,000 (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.--
            ``(1) Credit allowed only for 4 taxable years.--An election 
        to have this section apply 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 student for any 4 prior 
        taxable years.
            ``(2) Credit allowed for year only if individual is at 
        least \1/2\ time student for portion of year.--No credit shall 
        be allowed under subsection (a) for a taxable year with respect 
        to the qualified tuition and related expenses of an individual 
        unless such individual is an eligible student for at least one 
        academic period which begins during such year.
            ``(3) Credit allowed only for first 4 years of 
        postsecondary education.--No credit shall be allowed under 
        subsection (a) for a taxable year with respect to the qualified 
        tuition and related expenses of an eligible student if the 
        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.--Any amount 
                determined with respect to an individual under 
                subparagraph (A) which is attributable to a 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 $43,000 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) 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).
    (c) 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) Section 529(c)(3)(B)(v)(I) of such Code is amended by 
        striking ``section 25A(g)(2)'' and inserting ``section 
        25A(f)(2)''.
            (4) Section 529(e)(3)(B)(i) of such Code is amended by 
        striking ``section 25A(b)(3)'' and inserting ``section 
        25A(d)''.
            (5) 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''.
            (6) Section 530(d)(4)(B)(iii) of such Code is amended by 
        striking ``section 25A(g)(2)'' and inserting ``section 
        25A(d)(4)(B)''.
            (7) Section 6050S(e) of such Code is amended by striking 
        ``subsection (g)(2)'' and inserting ``subsection (f)(2)''.
            (8) Section 6211(b)(4)(A) of such Code is amended by 
        striking ``subsection (i)(6)'' and inserting ``subsection 
        (b)''.
            (9) 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)''.
            (10) 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)'', and
                            (ii) by striking ``with respect to taxable 
                        years beginning after 2008 and before 2018'' 
                        each place it appears and inserting ``with 
                        respect to 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)''.
            (11) 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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 3. 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.
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