### §25A. American Opportunity and Lifetime Learning credits

#### (a) Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the amount equal to the sum of—

(1) the American Opportunity Tax Credit, plus

(2) the Lifetime Learning Credit.

#### (b) American Opportunity Tax Credit

#### (1) Per student credit

In the case of any eligible student for whom an election is in effect under this section for any taxable year, the American Opportunity Tax Credit is an amount equal to the sum of—

(A) 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

(B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.

#### (2) Limitations applicable to American Opportunity Tax Credit

#### (A) Credit allowed only for 4 taxable years

An election to have this section apply with respect to any eligible student for purposes of the American Opportunity Tax Credit under subsection (a)(1) 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.

#### (B) Credit allowed for year only if individual is at least 1⁄2 time student for portion of year

The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed 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.

#### (C) Credit allowed only for first 4 years of postsecondary education

The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed 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.

#### (D) Denial of credit if student convicted of a felony drug offense

The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for qualified tuition and related expenses for the enrollment or attendance of a student for any academic period if such student has been convicted of a Federal or State felony offense consisting of the possession or distribution of a controlled substance before the end of the taxable year with or within which such period ends.

#### (3) Eligible student

For purposes of this subsection, 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 this section, and

(B) is carrying at least 1⁄2 the normal full-time work load for the course of study the student is pursuing.

#### (4) Restrictions on taxpayers who improperly claimed American Opportunity Tax Credit in prior years

#### (A) Taxpayers making prior fraudulent or reckless claims

#### (i) In general

No American Opportunity Tax Credit shall be allowed under this section for any taxable year in the disallowance period.

#### (ii) Disallowance period

For purposes of subparagraph (A), the disallowance period is—

(I) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of the American Opportunity Tax Credit under this section was due to fraud, and

(II) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of the American Opportunity Tax Credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).

#### (B) Taxpayers making improper prior claims

In the case of a taxpayer who is denied the American Opportunity Tax Credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no American Opportunity Tax Credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.

#### (c) Lifetime Learning Credit

#### (1) Per taxpayer credit

The Lifetime Learning Credit for any taxpayer for any taxable year is an amount equal to 20 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year) as does not exceed $10,000.

#### (2) Special rules for determining expenses

#### (A) Coordination with American Opportunity Tax Credit

The qualified tuition and related expenses with respect to an individual who is an eligible student for whom a 1 American Opportunity Tax Credit under subsection (a)(1) is allowed for the taxable year shall not be taken into account under this subsection.

#### (B) Expenses eligible for Lifetime Learning Credit

For purposes of paragraph (1), qualified tuition and related expenses shall include expenses described in subsection (f)(1) with respect to any course of instruction at an eligible educational institution to acquire or improve job skills of the individual.

#### (d) Limitations based on modified adjusted gross income

#### (1) In general

The American Opportunity Tax Credit and the Lifetime Learning Credit shall each (determined without regard to this paragraph) be reduced (but not below zero) by the amount which bears the same ratio to each such credit (as so determined) as—

(A) the excess of—

(i) the taxpayer's modified adjusted gross income for such taxable year, over

(ii) $80,000 ($160,000 in the case of a joint return), bears to

(B) $10,000 ($20,000 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.

#### (e) Election not to have section apply

A taxpayer may elect not to have this section apply with respect to the qualified tuition and related expenses of an individual for any taxable year.

#### (f) Definitions

For purposes of this section—

#### (1) Qualified tuition and related expenses

#### (A) In general

The term "qualified tuition and related expenses" means tuition and fees required for the 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.

#### (D) Required course materials taken into account for American Opportunity Tax Credit

For purposes of determining the American Opportunity Tax Credit, subparagraph (A) shall be applied by substituting "tuition, fees, and course materials" for "tuition and fees".

#### (2) 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 the date of the enactment of this section, and

(B) which is eligible to participate in a program under title IV of such Act.

#### (g) Special rules

#### (1) Identification requirement

#### (A) In general

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 on the return of tax for the taxable year.

#### (B) Additional identification requirements with respect to American Opportunity Tax Credit

#### (i) Student

The requirements of subparagraph (A) shall not be treated as met with respect to the American Opportunity Tax Credit unless the individual's taxpayer identification number was issued on or before the due date for filing the return of tax for the taxable year.

#### (ii) Taxpayer

No American Opportunity Tax Credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.

#### (iii) Institution

No American Opportunity Tax Credit shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which qualified tuition and related expenses were paid with respect to the individual.

#### (2) Adjustment for certain scholarships, etc.

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 subsections (b), (c), and (d)) 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 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.

#### (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,

(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, and

(C) a statement described in paragraph (8) and received by such individual shall be treated as received by the 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 expense 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.

#### (8) Payee statement requirement

Except as otherwise provided by the Secretary, no credit shall be allowed under this section unless the taxpayer receives a statement furnished under section 6050S(d) which contains all of the information required by paragraph (2) thereof.

#### [(h) Repealed. Pub. L. 116–260, div. EE, title I, §104(a)(2), Dec. 27, 2020, 134 Stat. 3041]

#### (i) Portion of American Opportunity Tax Credit made refundable

Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit (determined after application of subsection (d) and without regard to this paragraph 2 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.

#### (j) Regulations

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 amount which was taken into account in determining the amount of such credit.

(Added Pub. L. 105–34, title II, §201(a), Aug. 5, 1997, 111 Stat. 799; amended Pub. L. 107–16, title IV, §401(g)(2)(A), June 7, 2001, 115 Stat. 59; Pub. L. 111–5, div. B, title I, §1004(a), Feb. 17, 2009, 123 Stat. 313; Pub. L. 111–148, title X, §10909(b)(2)(C), (c), Mar. 23, 2010, 124 Stat. 1023; Pub. L. 111–312, title I, §§101(b)(1), 103(a)(1), Dec. 17, 2010, 124 Stat. 3298, 3299; Pub. L. 112–240, title I, §§103(a)(1), 104(c)(2)(D), Jan. 2, 2013, 126 Stat. 2319, 2322; Pub. L. 113–295, div. A, title II, §209(b), Dec. 19, 2014, 128 Stat. 4028; Pub. L. 114–27, title VIII, §804(a), June 29, 2015, 129 Stat. 415; Pub. L. 114–113, div. Q, title I, §102(a), title II, §§206(a), 208(a)(2), 211(a), Dec. 18, 2015, 129 Stat. 3044, 3082, 3083, 3085; Pub. L. 115–97, title I, §11002(d)(1)(B), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 115–141, div. U, title I, §101(l)(1)–(9), (11)–(14), title IV, §401(b)(1), Mar. 23, 2018, 132 Stat. 1162–1165, 1201; Pub. L. 116–260, div. EE, title I, §104(a), Dec. 27, 2020, 134 Stat. 3040.)

#### Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

#### **Editorial Notes**

#### References in Text

The date of the enactment of this section, referred to in subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of Pub. L. 105–34 which was approved Aug. 5, 1997.

The Higher Education Act of 1965, referred to in subsec. (f)(2)(B), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Title IV of the Act is classified generally to subchapter IV (§1070 et seq.) of chapter 28 of Title 20, Education. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables.

#### Amendments

2020—Subsec. (d). Pub. L. 116–260, §104(a)(1), added par. (1), redesignated par. (3) as (2), and struck out former pars. (1) and (2) which provided income limitations for the American Opportunity Tax Credit and Lifetime Learning Credit, respectively.

Subsec. (h). Pub. L. 116–260, §104(a)(2), struck out subsec. (h) which related to inflation adjustments for the Lifetime Learning Credit for taxable years beginning after 2001.

2018—Pub. L. 115–141, §101(l)(14), substituted "American Opportunity Tax Credit" for "Hope Scholarship Credit" wherever appearing in text.

Pub. L. 115–141, §101(l)(9), substituted "American Opportunity" for "Hope" in section catchline.

Subsec. (b). Pub. L. 115–141, §101(l)(11), substituted "American Opportunity Tax Credit" for "Hope Scholarship Credit" in heading.

Subsec. (b)(1)(A). Pub. L. 115–141, §101(l)(1)(A), substituted "$2,000" for "$1,000".

Subsec. (b)(1)(B). Pub. L. 115–141, §101(l)(1)(B), substituted "25 percent" for "50 percent", "$2,000" for "$1,000", and "$4,000" for "the applicable limit".

Subsec. (b)(2). Pub. L. 115–141, §101(l)(12), substituted "American Opportunity Tax Credit" for "Hope Scholarship Credit" in heading.

Subsec. (b)(2)(A), (C). Pub. L. 115–141, §101(l)(2), substituted "4" for "2" in heading and text.

Subsec. (b)(4). Pub. L. 115–141, §101(l)(3), amended par. (4) generally. Prior to amendment, text read as follows: "For purposes of paragraph (1)(B), the applicable limit for any taxable year is an amount equal to 2 times the dollar amount in effect under paragraph (1)(A) for such taxable year."

Subsec. (c)(1). Pub. L. 115–141, §401(b)(1), struck out "($5,000 in the case of taxable years beginning before January 1, 2003)" after "$10,000".

Subsec. (c)(2)(A). Pub. L. 115–141, §101(l)(13), substituted "American Opportunity Tax Credit" for "Hope Scholarship" in heading.

Subsec. (d). Pub. L. 115–141, §101(l)(4), amended subsec. (d) generally. Prior to amendment, subsec. (d) related to limitation based on modified adjusted gross income.

Subsec. (f)(1)(D). Pub. L. 115–141, §101(l)(5), added subpar. (D).

Subsec. (g)(1). Pub. L. 115–141, §101(l)(6), designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).

Subsec. (h). Pub. L. 115–141, §101(l)(7), amended subsec. (h) generally. Prior to amendment, subsec. (h) related to inflation adjustments.

Subsec. (i). Pub. L. 115–141, §101(l)(8), amended subsec. (i) generally. Prior to amendment, subsec. (i) related to the American Opportunity Tax Credit in any taxable year beginning after 2008.

2017—Subsec. (h)(1)(A)(ii), (2)(A)(ii). Pub. L. 115–97 substituted "for 'calendar year 2016' in subparagraph (A)(ii)" for "for 'calendar year 1992' in subparagraph (B)".

2015—Subsec. (g)(3)(C). Pub. L. 114–27, §804(a)(2), added subpar. (C).

Subsec. (g)(8). Pub. L. 114–27, §804(a)(1), added par. (8).

Subsec. (i). Pub. L. 114–113, §102(a), struck out "and before 2018" after "2008" in introductory provisions.

Subsec. (i)(6). Pub. L. 114–113, §206(a)(2), added par. (6).

Pub. L. 114–113, §206(a)(1), struck out par. (6). Text read as follows: "In the case of a taxpayer with respect to whom section 702(a)(1)(B) of the Heartland Disaster Tax Relief Act of 2008 applies for any taxable year, such taxpayer may elect to waive the application of this subsection to such taxpayer for such taxable year."

Subsec. (i)(6)(C). Pub. L. 114–113, §211(a), added subpar. (C).

Subsec. (i)(7). Pub. L. 114–113, §208(a)(2), added par. (7).

2014—Subsec. (i)(3). Pub. L. 113–295 substituted "For purposes of determining the Hope Scholarship Credit, subsection (f)(1)(A) shall be applied" for "Subsection (f)(1)(A) shall be applied".

2013—Subsec. (i). Pub. L. 112–240, §103(a)(1), substituted "after 2008 and before 2018" for "in 2009, 2010, 2011, or 2012" in introductory provisions.

Subsec. (i)(5) to (7). Pub. L. 112–240, §104(c)(2)(D), redesignated pars. (6) and (7) as (5) and (6), respectively, substituted "section 26(a)" for "section 26(a)(2) or paragraph (5), as the case may be" in par. (5), and struck out former par. (5) which related to credit allowed against alternative minimum tax.

2010—Subsec. (i). Pub. L. 111–312, §103(a)(1), substituted ", 2010, 2011, or 2012" for "or 2010" in introductory provisions.

Subsec. (i)(5)(B). Pub. L. 111–148, §10909(b)(2)(C), (c), as amended by Pub. L. 111–312, §101(b)(1), temporarily substituted "25D" for "23, 25D,". See Effective and Termination Dates of 2010 Amendment note below.

2009—Subsecs. (i), (j). Pub. L. 111–5 added subsec. (i) and redesignated former subsec. (i) as (j).

2001—Subsec. (e). Pub. L. 107–16, §401(g)(2)(A), amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows:

"(1) In general.—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 the taxpayer elects to have this section apply with respect to such individual for such year.

"(2) Coordination with exclusions.—An election under this subsection shall not take effect with respect to an individual for any taxable year if any portion of any distribution during such taxable year from an education individual retirement account is excluded from gross income under section 530(d)(2)."

#### **Statutory Notes and Related Subsidiaries**

#### Effective Date of 2020 Amendment

Pub. L. 116–260, div. EE, title I, §104(c), Dec. 27, 2020, 134 Stat. 3041, provided that: "The amendments made by this section [amending this section and sections 62, 74, 86, 135, 137, 219, 221, and 469 of this title and repealing section 222 of this title] shall apply to taxable years beginning after December 31, 2020."

#### Effective Date of 2018 Amendment

Amendment by section 101(l)(1) to (9), (11) to (14) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title.

#### Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title.

#### Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title I, §102(c), Dec. 18, 2015, 129 Stat. 3044, provided that: "The amendments made by this section [amending this section and provisions set out as a note below] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 18, 2015]."

Pub. L. 114–113, div. Q, title II, §206(b), Dec. 18, 2015, 129 Stat. 3082, as amended by Pub. L. 115–141, div. U, title I, §101(j), Mar. 23, 2018, 132 Stat. 1162, provided that:

"(1) In general.—The amendment made by subsection (a)(2) [amending this section] shall apply to any return of tax, and any amendment or supplement to any return of tax, which is filed after the date of the enactment of this Act [Dec. 18, 2015].

"(2) Repeal of deadwood.—The amendment made by subsection (a)(1) [amending this section] shall take effect on the date of the enactment of this Act."

Amendment by section 208(a)(2) of Pub. L. 114–113 applicable to taxable years beginning after Dec. 31, 2015, see section 208(c) of Pub. L. 114–113, set out as a note under section 24 of this title.

Pub. L. 114–113, div. Q, title II, §211(c)(1), Dec. 18, 2015, 129 Stat. 3085, provided that: "The amendments made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 2015."

Pub. L. 114–27, title VIII, §804(d), June 29, 2015, 129 Stat. 416, provided that: "The amendments made by this section [amending this section and sections 222 and 6050S of this title] shall apply to taxable years beginning after the date of the enactment of this Act [June 29, 2015]."

#### Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009, Pub. L. 111–5, div. B, title I, to which such amendment relates, see section 209(k) of Pub. L. 113–295, set out as a note under section 24 of this title.

#### Effective Date of 2013 Amendment

Amendment by section 103(a)(1) of Pub. L. 112–240 applicable to taxable years beginning after Dec. 31, 2012, see section 103(e)(1) of Pub. L. 112–240, set out as a note under section 24 of this title.

Amendment by section 104(c)(2)(D) of Pub. L. 112–240 applicable to taxable years beginning after Dec. 31, 2011, see section 104(d) of Pub. L. 112–240, set out as a note under section 23 of this title.

#### Effective and Termination Dates of 2010 Amendment

Amendment by section 103(a)(1) of Pub. L. 111–312 applicable to taxable years beginning after Dec. 31, 2010, see section 103(d) of Pub. L. 111–312, set out as a note under section 24 of this title.

Amendment by Pub. L. 111–148 terminated applicable to taxable years beginning after Dec. 31, 2011, and section is amended to read as if such amendment had never been enacted, see section 10909(c) of Pub. L. 111–148, set out as a note under section 1 of this title.

Amendment by Pub. L. 111–148 applicable to taxable years beginning after Dec. 31, 2009, see section 10909(d) of Pub. L. 111–148, set out as a note under section 1 of this title.

#### Effective Date of 2009 Amendment

Amendment by Pub. L. 111–5 applicable to taxable years beginning after Dec. 31, 2008, see section 1004(d) of Pub. L. 111–5, set out as an Effective and Termination Dates of 2009 Amendment note under section 24 of this title.

#### Effective Date of 2001 Amendment

Pub. L. 107–16, title IV, §401(h), June 7, 2001, 115 Stat. 60, provided that: "The amendments made by this section [amending this section and sections 135, 530, and 4973 of this title] shall apply to taxable years beginning after December 31, 2001."

#### Effective Date

Pub. L. 105–34, title II, §201(f), Aug. 5, 1997, 111 Stat. 806, provided that:

"(1) In general.—The amendments made by this section [enacting this section and section 6050S of this title and amending sections 135, 6213, and 6724 of this title] shall apply to expenses paid after December 31, 1997 (in taxable years ending after such date), for education furnished in academic periods beginning after such date.

"(2) Lifetime learning credit.—Section 25A(a)(2) of the Internal Revenue Code of 1986 shall apply to expenses paid after June 30, 1998 (in taxable years ending after such date), for education furnished in academic periods beginning after such dates."

#### Savings Provision

For provisions that nothing in amendment by section 401(b)(1) of Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.

#### Treatment of Possessions

Pub. L. 111–5, div. B, title I, §1004(c), Feb. 17, 2009, 123 Stat. 314, as amended by Pub. L. 111–312, title I, §103(a)(2), Dec. 17, 2010, 124 Stat. 3299; Pub. L. 112–240, title I, §103(a)(2), Jan. 2, 2013, 126 Stat. 2319; Pub. L. 114–113, div. Q, title I, §102(b), Dec. 18, 2015, 129 Stat. 3044, provided that:

"(1) Payments to possessions.—

"(A) Mirror code possession.—The Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the application of section 25A(i)(6) [now 25A(i)] of the Internal Revenue Code of 1986 (as added by this section) with respect to taxable years beginning after 2008. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.

"(B) Other possessions.—The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the application of section 25A(i)(6) [now 25A(i)] of such Code (as so added) for taxable years beginning after 2008 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession.

"(2) Coordination with credit allowed against united states income taxes.—Section 25A(i)(6) [now 25A(i)] of such Code (as added by this section) shall not apply to a bona fide resident of any possession of the United States.

"(3) Definitions and special rules.—

"(A) Possession of the united states.—For purposes of this subsection, the term 'possession of the United States' includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands.

"(B) Mirror code tax system.—For purposes of this subsection, the term 'mirror code tax system' means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.

"(C) Treatment of payments.—For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under section 25A of the Internal Revenue Code of 1986 by reason of subsection (i)(6) [now (i)(5)] of such section (as added by this section)."

[Amendments by Pub. L. 112–240, §103(a)(2), and Pub. L. 114–113, §102(b), were executed as the probable intent of Congress to section 1004(c)(1) of the American Recovery and Reinvestment Tax Act of 2009, set out above, which act is title I of div. B of Pub. L. 111–5, notwithstanding directory language amending section 1004(c)(1) of division B of the American Recovery and Reinvestment Tax Act of 2009.]

1 So in original. Probably should be "an".

2 So in original. Probably should be "this subsection".