To amend the Internal Revenue Code of 1986 to allow a refundable credit for education expenses of children receiving or eligible to receive free or reduced price school meals.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children's Education Tax Credit 
Act''.

SEC. 2. CREDIT FOR EDUCATION EXPENSES OF STUDENTS RECEIVING OR ELIGIBLE 
              TO RECEIVE FREE OR REDUCED PRICE SCHOOL MEALS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. EDUCATION EXPENSES OF STUDENTS RECEIVING OR ELIGIBLE TO 
              RECEIVE FREE OR REDUCED PRICE SCHOOL MEALS.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year the amount of the qualified education expenses paid by the 
taxpayer during the taxable year for the education of any individual--
            ``(1) with respect to whom the taxpayer is allowed a 
        deduction under section 151(c), and
            ``(2) who receives (or is eligible to receive) free or 
        reduced price meals under the Richard B. Russell National 
        School Lunch Act or the Child Nutrition Act of 1966 for the 
        period to which such expenses relate.
    ``(b) Limitation.--The amount allowed as a credit under subsection 
(a) for any taxable year with respect to the qualified education 
expenses of any 1 individual shall not exceed $1,500.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified education expenses.--
                    ``(A) In general.--The term `qualified education 
                expenses' means amounts paid for--
                            ``(i) tuition and fees required for the 
                        enrollment or attendance of a student at an 
                        eligible educational institution, and
                            ``(ii) fees, tutoring, books, supplies, 
                        computer equipment (including related software 
                        and services) and other equipment required for 
                        courses of instruction at an eligible 
                        educational institution.
                    ``(B) Meals and lodging expenses not included.--
                Such term does not include any amount paid, directly or 
                indirectly, for meals, lodging, or similar personal, 
                living, or family expenses. In the event an amount paid 
                for tuition or fees includes an amount for meals, 
                lodging, or similar expenses which is not separately 
                stated, the portion of such amount which is 
                attributable to meals, lodging, or similar expenses 
                shall be determined under regulations prescribed by the 
                Secretary.
                    ``(C) Special rule for home schooling.--In the case 
                of education furnished in the home (as a substitute for 
                public education) which meets the requirements of State 
                law relating to compulsory school attendance, the term 
                `qualified education expenses' means amounts paid for 
                tutoring, books, supplies, computer equipment 
                (including related software and services), and other 
                equipment used in furnishing such education.
            ``(2) Eligible educational institution.--The term `eligible 
        educational institution' means--
                    ``(A) a secondary school,
                    ``(B) an elementary school, or
                    ``(C) any private, parochial, religious, or home 
                school organized for the purpose of providing 
                elementary or secondary education, or both.
            ``(3) Elementary and secondary schools.--The terms 
        `elementary school' and `secondary school' have the respective 
        meanings given such terms by section 14101 of the Elementary 
        and Secondary Education Act of 1965.
    ``(d) Adjustment for Certain Scholarships.--The amounts otherwise 
taken into account under subsection (a) as qualified education expenses 
of any individual during any period shall be reduced (before the 
application of subsection (b)) by the sum of the amounts received with 
respect to such individual for the taxable year as a qualified 
scholarship which under section 117 is not includable in gross income.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section.''
    (b) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by striking ``or'' after ``1978,'' and 
        by inserting before the period ``, or enacted by the Children's 
        Education Tax Credit Act''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new items:

                              ``Sec. 35. Education expenses of students 
                                        receiving or eligible to 
                                        receive free or reduced price 
                                        school meals.
                              ``Sec. 36. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

Summary: Children's Education Tax Credit Act - Amends the Internal Revenue Code to establish a tax credit for the qualified educational expenses paid by a taxpayer on behalf of a dependent individual who receives or is eligible to receive free or reduced price school meals. Defines eligible educational institution as a secondary school, an elementary school, or any private, parochial, religious, or home school providing elementary or secondary education, or both.