Save for Success Act

Summary: Save for Success Act  This bill amends the Internal Revenue Code, with respect to the American Opportunity Tax Credit for qualified tuition and related expenses, to: (1) permit up to $250 of the credit per year to be used for college savings contributions that are taken into account before tuition and fees, (2) direct the Departments of the Treasury and Education to jointly establish a pilot program to make periodic payments of the credit as educational expenses for a student are incurred during the taxable year, and (3) direct Treasury to establish a taxpayer awareness program to inform the public of the availability of the credit. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Save for Success Act''.

SEC. 2. AMERICAN OPPORTUNITY TAX CREDIT SAVINGS CREDIT.

    (a) In General.--Section 25A of the Internal Revenue Code of 1986 
is amended by redesignating subsection (j) as subsection (k) and by 
inserting after subsection (i) the following:
    ``(j) Special Rules Relating to AOTC Savings Credit.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified tuition and related expenses' with respect to any 
        individual includes eligible college savings contributions for 
        such individual. Such contributions shall be taken into account 
        for purposes of subsection (i)(1)(A) before tuition and fees.
            ``(2) Limitation.--
                    ``(A) In general.--The aggregate amount of 
                contributions with respect to an individual which may 
                be taken into account under paragraph (1) for a taxable 
                year is $250.
                    ``(B) Phase out.--The dollar amount in subparagraph 
                (A) shall be reduced (but not below zero) by the amount 
                which bears the same ratio to such dollar amount as--
                            ``(i) the number of percentage points (if 
                        any) in excess of 133 percent that the 
                        taxpayer's household income for the taxable 
                        year is of the poverty line for a family of the 
                        size involved, bears to
                            ``(ii) 400 percentage points.
            ``(3) Terms relating to income and families.--The terms 
        `family size', `household income', and `poverty line' shall 
        have the meanings given such terms by section 36B(d).
            ``(4) Eligible higher education contribution.--For purposes 
        of paragraph (1), the term `eligible college savings 
        contribution' with respect to an individual means the excess 
        of--
                    ``(A) contributions by the taxpayer in the taxable 
                year to qualified college savings accounts of which the 
                individual is the beneficiary, over
                    ``(B) distributions from all such qualified college 
                savings accounts for the taxable year.
            ``(5) Qualified college savings accounts.--The term 
        `qualified college savings account' with respect to which such 
        individual is the beneficiary means--
                    ``(A) an account under a qualified tuition program 
                (as defined by section 529), and
                    ``(B) an account under a program of a State (or 
                political jurisdiction thereof) established exclusively 
                for the purpose of paying for college tuition and other 
                post-secondary educational expenses.
            ``(6) Portion of credit made refundable.--So much of the 
        credit allowed under subsection (a) as is attributable to this 
        subsection (determined after the application of subsection (i) 
        and without regard to this subsection and section 26(a)) shall 
        be treated as a credit allowable under subpart C (and not 
        allowed under subsection (a)). The preceding sentence shall not 
        apply to any taxpayer for any taxable year if such taxpayer is 
        a child to whom subsection (g) of section 1 applies for such 
        taxable year.''.
    (b) AOTC Lifetime Limitation.--Section 25A(i)(2) of such Code is 
amended to read as follows:
            ``(2) Limitation.--In lieu of subparagraphs (A) and (C) of 
        subsection (b)(2), the amount allowed as a credit under this 
        section for the taxable year with respect to an individual 
        shall not exceed--
                    ``(A) $10,000, reduced
                    ``(B) by the amount allowed under this section with 
                respect to such individual for all prior taxable 
                years.''.
    (c) Pilot Program To Make Periodic Payments as College Expenses 
Incurred.--Section 25A(i) of such Code is amended by adding at the end 
the following:
            ``(8) Pilot program to make periodic payments as college 
        expenses incurred.--
                    ``(A) In general.--The Secretary of the Treasury 
                and the Secretary of Education shall jointly establish 
                a program designed to make payments periodically to or 
                on behalf of an eligible student as the student incurs 
                qualified expenses during the taxable year. The total 
                amount that may be so paid to or on behalf of an 
                eligible student through this program shall not exceed 
                the credit which would (but for subparagraph (B)) be 
                allowable under this section if subsection (d) were 
                applied by using the taxpayer's modified adjusted gross 
                income for the preceding taxable year.
                    ``(B) Credit reduced by pilot program payments.--
                The credit allowable under this section (without regard 
                to this subparagraph) for any taxable year shall be 
                reduced (but not below zero) by the payments made with 
                respect to a student under subparagraph (A) for 
                expenses which would otherwise be taken into account in 
                determining the credit under this section for such 
                year.
                    ``(C) Program participation.--Participation in the 
                program established under this paragraph shall be 
                voluntary with respect to both students and educational 
                institutions; except that, institutions which are 
                taxable under this chapter (other than by reason of 
                section 511) may not participate in such program.
                    ``(D) Program period.--The program established 
                under this paragraph shall apply to expenses for 
                academic periods beginning during the 5-year period 
                which begins on the date which is 1 year after the date 
                of the enactment of this paragraph.
                    ``(E) Payments not treated as resources for 
                financial aid.--Payments made under this paragraph 
                shall not be treated as resources for purposes of 
                determining the amount of any financial aid which is 
                funded in whole or part with Federal funds. Payments 
                under the program shall not be made in a manner that 
                would reduce the State, private, or institutional aid 
                available to an eligible student.
                    ``(F) Notice of program.--Educational institutions 
                participating in the program established under this 
                paragraph shall provide appropriate notices to parents 
                and students of the option of payments under such 
                program. Such notices shall not be considered tax 
                advice for purposes of any Federal law or regulation.
                    ``(G) Reporting.--The Secretary of the Treasury and 
                the Secretary of Education shall jointly submit annual 
                reports to Congress on the program established under 
                this subsection, together with any recommendations with 
                respect to such program.''.
    (d) Conforming Amendment.--Section 6211(b)(4)(A) of such Code is 
amended by inserting ``or (j)(6)'' after ``subsection (i)(6)''.
    (e) Increased Public Awareness of American Opportunity Tax 
Credit.--
            (1) In general.--The Secretary of the Treasury, or the 
        Secretary's delegate, in consultation with the Secretary of 
        Education, shall establish a taxpayer awareness program to 
        inform the taxpaying public of the availability of the American 
        Opportunity Tax Credit allowed under section 25A of the 
        Internal Revenue Code of 1986. Such public awareness program 
        shall be designed to assure that individuals who may be 
        eligible are informed of the availability of such credit and 
        filing procedures.
            (2) Means of communications.--
                    (A) In general.--The Secretary of the Treasury, or 
                the Secretary's delegate, in consultation with the 
                Secretary of Education, shall use appropriate means of 
                communication to carry out the provisions of this 
                section. The taxpayer awareness program shall include, 
                but not be limited to, prominent display of information 
                about the availability of the American Opportunity Tax 
                Credit on information return forms specified by such 
                Secretary for use by educational institutions to report 
                qualified tuition and related expenses incurred.
                    (B) Additional steps.--In addition, the Secretary 
                of the Treasury, or the Secretary's delegate, in 
                consultation with the Secretary of Education, should--
                            (i) make students aware of the American 
                        Opportunity Tax Credit through the data 
                        retrieval tool and the student aid report of 
                        the Department of Education;
                            (ii) include information on the financial 
                        aid shopping sheet;
                            (iii) include the American Opportunity Tax 
                        Credit in the volunteer income tax assistance 
                        program; and
                            (iv) bring awareness of the American 
                        Opportunity Tax Credit in the Federal TRIO 
                        Programs (commonly known as ``TRIO'') under 
                        chapter 1 of subpart 2 of part A of title IV of 
                        the Higher Education Act of 1965 (20 U.S.C. 
                        1070a-11 et seq.) and in the Gaining Early 
                        Awareness and Readiness for Undergraduate 
                        Programs (commonly known as ``GEAR UP'') under 
                        chapter 2 of subpart 2 of part A of title IV of 
                        such Act (20 U.S.C. 1070a-21 et seq.).
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.