I

104TH CONGRESS

2D SESSION H. R. 3245

To amend the Internal Revenue Code of 1986 to provide a deduction for

higher education expenses.

IN THE HOUSE OF REPRESENTATIVES

APRIL 15, 1996

Mr. POMEROY 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 provide

a deduction for higher education expenses.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Education Afford5 ability Act of 1996’’.

6 SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

7 (a) IN GENERAL.—Part VII of subchapter B of chap8 ter I of the Internal Revenue Code of 1986 (relating to

9 additional itemized deductions for individuals) is amended
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1 by redesignating section 220 as section 221 and by insert2 ing after section 219 the following new section:

3 ‘‘SEC. 220. HIGHER EDUCATION TUITION AND FEES.

4 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an

5 individual, there shall be allowed as a deduction the

6 amount of qualified higher education expenses paid by the

7 taxpayer during the taxable year.

8 ‘‘(b) LIMITATIONS.—

9 ‘‘(1) DOLLAR LIMITATION.—The amount al10 lowed as a deduction under subsection (a) for any

11 taxable year shall not exceed $5,000 ($2,500 in the

12 case of a married individual filing separately).

13 ‘‘(2) LIMITATION BASED ON MODIFIED AD14 JUSTED GROSS INCOME.—

15 ‘‘(A) IN GENERAL.—The dollar limitation

16 which would (but for this paragraph) be taken

17 into account under paragraph (1) shall be re18 duced (but not below zero) by the amount de19 termined under subparagraph (B).

20 ‘‘(B) AMOUNT OF REDUCTION.—The

21 amount determined under this subparagraph

22 equals the amount which bears the same ratio

23 to such dollar limitation as—

24 ‘‘(i) the excess (if any) of—
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1 ‘‘(I) the taxpayer’s modified ad2 justed gross income for such taxable

3 year, over

4 ‘‘(II) $60,000 ($80,000 in the

5 case of a joint return), bears to

6 ‘‘(ii) $15,000.

7 ‘‘(C) MODIFIED ADJUSTED GROSS IN8 COME.—For purposes of subparagraph (B), the

9 term ‘modified adjusted gross income’ means

10 the adjusted gross income of the taxpayer for

11 the taxable year determined—

12 ‘‘(i) without regard to this section and

13 sections 911, 931, and 933, and

14 ‘‘(ii) after the application of sections

15 86, 135, 219, and 469.

16 For purposes of sections 86, 135, 219, and

17 469, adjusted gross income shall be determined

18 without regard to the deduction allowed under

19 this section.

20 ‘‘(c) QUALIFIED HIGHER EDUCATION EXPENSES.—

21 For purposes of this section—

22 ‘‘(1) QUALIFIED HIGHER EDUCATION EX23 PENSES.—

24 ‘‘(A) IN GENERAL.—The term ‘qualified

25 higher education expenses’ means tuition and
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1 fees charged by an educational institution and

2 required for the enrollment or attendance of—

3 ‘‘(i) the taxpayer,

4 ‘‘(ii) the taxpayer’s spouse, or

5 ‘‘(iii) any dependent of the taxpayer

6 with respect to whom the taxpayer is al7 lowed a deduction under section 151,

8 as an eligible student at an institution of higher

9 education.

10 ‘‘(B) EXCEPTION FOR EDUCATION INVOLV11 ING SPORTS, ETC.—Such term does not include

12 expenses with respect to any course or other

13 education involving sports, games, or hobbies,

14 unless such expenses—

15 ‘‘(i) are part of a degree program, or

16 ‘‘(ii) are deductible under this chapter

17 without regard to this section.

18 ‘‘(C) EXCEPTION FOR NONACADEMIC

19 FEES.—Such term does not include any student

20 activity fees, athletic fees, insurance expenses,

21 or other expenses unrelated to a student’s aca22 demic course of instruction.

23 ‘‘(D) ELIGIBLE STUDENT.—For purposes

24 of subparagraph (A), the term ‘eligible student’

25 means a student who—
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1 ‘‘(i) meets the requirements of section

2 484(a)(1) of the Higher Education Act of

3 1965 (20 U.S.C. 1091(a)(1)), as in effect

4 on the date of the enactment of this sec5 tion, and

6 ‘‘(ii)(I) is carrying at least one-half

7 the normal full-time work load for the

8 course of study the student is pursuing, as

9 determined by the institution of higher

10 education, or

11 ‘‘(II) is enrolled in a course which en12 ables the student to improve the student’s

13 job skills or to acquire new job skills.

14 ‘‘(E) IDENTIFICATION REQUIREMENT.—No

15 deduction shall be allowed under subsection (a)

16 to a taxpayer with respect to an eligible student

17 unless the taxpayer includes the name, age, and

18 taxpayer identification number of such eligible

19 student on the return of tax for the taxable

20 year.

21 ‘‘(2) INSTITUTION OF HIGHER EDUCATION.—

22 The term ‘institution of higher education’ means an

23 institution which—

24 ‘‘(A) is described in section 481 of the

25 Higher Education Act of 1965 (20 U.S.C.
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1 1088), as in effect on the date of the enactment

2 of this section, and

3 ‘‘(B) is eligible to participate in programs

4 under title IV of such Act.

5 ‘‘(d) SPECIAL RULES.—

6 ‘‘(1) NO DOUBLE BENEFIT.—

7 ‘‘(A) IN GENERAL.—No deduction shall be

8 allowed under subsection (a) for qualified high9 er education expenses with respect to which a

10 deduction is allowable to the taxpayer under

11 any other provision of this chapter unless the

12 taxpayer irrevocably waives his right to the de13 duction of such expenses under such other pro14 vision.

15 ‘‘(B) DEPENDENTS.—No deduction shall

16 be allowed under subsection (a) to any individ17 ual with respect to whom a deduction under

18 section 151 is allowable to another taxpayer for

19 a taxable year beginning in the calendar year in

20 which such individual’s taxable year begins.

21 ‘‘(C) SAVINGS BOND EXCLUSION.—A de22 duction shall be allowed under subsection (a)

23 for qualified higher education expenses only to

24 the extent the amount of such expenses exceeds
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1 the amount excludable under section 135 for

2 the taxable year.

3 ‘‘(2) LIMITATION ON TAXABLE YEAR OF DE4 DUCTION.—

5 ‘‘(A) IN GENERAL.—A deduction shall be

6 allowed under subsection (a) for any taxable

7 year only to the extent the qualified higher edu8 cation expenses are in connection with enroll9 ment at an institution of higher education

10 during the taxable year.

11 ‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—

12 Subparagraph (A) shall not apply to qualified

13 higher education expenses paid during a taxable

14 year if such expenses are in connection with an

15 academic term beginning during such taxable

16 year or during the first 3 months of the next

17 taxable year.

18 ‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLAR19 SHIPS AND VETERANS BENEFITS.—The amount of

20 qualified higher education expenses otherwise taken

21 into account under subsection (a) with respect to the

22 education of an individual shall be reduced (before

23 the application of subsection (b)) by the sum of the

24 amounts received with respect to such individual for

25 the taxable year as—
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1 ‘‘(A) a qualified scholarship (as defined in

2 section 117) which under section 117 is not in3 cludable in gross income,

4 ‘‘(B) an educational assistance allowance

5 under chapter 30, 31, 32, 34, or 35 of title 38,

6 United States Code, or

7 ‘‘(C) a payment (other than a gift, be8 quest, devise, or inheritance within the meaning

9 of section 102(a)) for educational expenses, or

10 attributable to enrollment at an eligible edu11 cational institution, which is exempt from in12 come taxation by any law of the United States.

13 ‘‘(4) MARRIED INDIVIDUALS FILING SEPARATE

14 RETURNS.—In the case of a married individual filing

15 a separate return, subsection (b)(2)(B) shall be ap16 plied by substituting ‘$40,000’ for ‘$60,000’ and

17 ‘$7,500’ for ‘$15,000’. For purposes of this section,

18 marital status shall be determined under section

19 7703.

20 ‘‘(5) NONRESIDENT ALIENS.—If the taxpayer is

21 a nonresident alien individual for any portion of the

22 taxable year, this section shall apply only if such in23 dividual is treated as a resident alien of the United

24 States for purposes of this chapter by reason of an

25 election under subsection (g) or (h) of section 6013.
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1 ‘‘(6) REGULATIONS.—The Secretary may pre2 scribe such regulations as may be necessary or ap3 propriate to carry out this section, including regula4 tions requiring recordkeeping and information re5 porting.’’

6 (b) DEDUCTION ALLOWED IN COMPUTING AD7 JUSTED GROSS INCOME.—Section 62(a) of such Code is

8 amended by inserting after paragraph (15) the following

9 new paragraph:

10 ‘‘(16) HIGHER EDUCATION TUITION AND

11 FEES.—The deduction allowed by section 220.’’

12 (c) CONFORMING AMENDMENT.—The table of sec13 tions for part VII of subchapter B of chapter 1 of such

14 Code is amended by striking the item relating to section

15 220 and inserting:

‘‘Sec. 220. Higher education tuition and fees.

‘‘Sec. 221. Cross reference.’’

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to payments made after December

18 31, 1995.

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