DESCRIPTION OF H.R. 5193,

THE “BACK TO SCHOOL TAX RELIEF ACT OF 2002”

Scheduled for a Markup

By the

HOUSE COMMITTEE ON WAYS AND MEANS

July 25, 2002

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

July 23, 2002

JCX-79-02
i

CONTENTS

Page

INTRODUCTION .......................................................................................................................... 1

A. Extend Tuition Deduction to Qualified Elementary and Secondary 

Education Expenses............................................................................................................ 2
1

INTRODUCTION

The House Committee on Ways and Means has scheduled a markup on July 25, 2002, of 

H.R. 5193, the “Back to School Tax Relief Act of 2002.” This document,1 prepared by the staff 

of the Joint Committee on Taxation, provides a description of the “Back to School Tax Relief 

Act of 2002.”

 

1

 This document may be cited as follows: Joint Committee on Taxation, Description of 

H.R. 5193, the “Back to School Tax Relief Act of 2002,” (JCX-79-02), July 23, 2002.
2

A. Extend Tuition Deduction to Qualified Elementary

and Secondary Education Expenses

Present Law

An individual is allowed an above-the-line deduction for qualified tuition and related 

expenses for higher education paid by the individual during a taxable year.2 Qualified tuition 

and related expenses are tuition and fees required for the enrollment or attendance of the 

taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer with respect to whom the 

taxpayer may claim a personal exemption, at an eligible institution of higher education for 

courses of instruction of such individual at such institution. The deduction generally is not 

available for expenses with respect to a course or education involving sports, games, or hobbies, 

and is not available for student activity fees, athletic fees, insurance expenses, or other expenses 

unrelated to an individual’s academic course of instruction. The expenses must be in connection 

with enrollment at an institution of higher education during the taxable year, or with an academic 

term beginning during the taxable year or during the first three months of the next taxable year. 

The deduction is not available for tuition and related expenses paid for elementary or secondary 

education. 

For taxable years beginning in 2002 or 2003, the maximum deduction is $3,000 for an 

individual whose adjusted gross income for the taxable year does not exceed $65,000 ($130,000 

in the case of a joint return). For taxable years beginning in 2004 or 2005, the maximum 

deduction is $4,000 for an individual whose adjusted gross income for the taxable year does not 

exceed $65,000 ($130,000 in the case of a joint return), or $2,000 for other individuals whose 

adjusted gross income does not exceed $80,000 ($160,000 in the case of a joint return). No 

deduction is allowed an individual whose adjusted gross income exceeds the relevant adjusted 

gross income limitations, a married individual who does not file a joint return, or an individual 

with respect to whom a personal exemption deduction may be claimed by another taxpayer for 

the taxable year.

The amount of qualified tuition and related expenses must be reduced by certain 

scholarships, educational assistance allowances, and other amounts paid for the benefit of such 

individual,3 and by the amount of such expenses taken into account for purposes of determining 

any exclusion from gross income of: (1) income from certain United States Savings Bonds used 

to pay higher education tuition and fees; and (2) income from a Coverdell education savings 

account.4 Additionally, such expenses must be reduced by the earnings portion (but not the 

return of principal) of distributions from a section 529 qualified tuition program if exclusion 

under section 529 is claimed with respect to expenses eligible for an exclusion under section 222. 

No deduction is allowed for any expense for which a deduction is otherwise allowed or with 

 

2

 Sec. 222. (All section references are to the Internal Revenue Code, except as otherwise 

indicated.)

3

 Sec. 222(d)(1) and sec. 25A(g)(2).

4

 Sec. 222(c).
3

respect to an individual for whom a Hope Scholarship Credit or Lifetime Learning Credit is 

elected for such taxable year. 

The deduction is not available for taxable years beginning after December 31, 2005. 

Description of Proposal

The proposal would extend the above-the-line deduction to “qualified elementary and 

secondary education expenses” paid in connection with an “eligible K-12 student.” Qualified 

elementary and secondary education expenses generally would be defined under the present-law 

rules applicable to Coverdell education savings accounts5 and would include (1) expenses for 

tuition, fees, academic tutoring, special needs services,6 books, supplies, and other equipment 

that are incurred in connection with enrollment or attendance at a public, private, religious, or 

home school as determined under State law that provides elementary or secondary education as 

determined under State law; (2) expenses for uniforms, transportation, and supplementary items 

and services (including extended day programs) that are required or provided by such a school 

(other than a home school) in connection with such enrollment or attendance; and (3) expenses 

for the purchase of any computer technology or equipment or Internet access and related 

services, if such items are to be used by the student or the student’s family during any of the 

years the student is in school.7 Qualified elementary and secondary education expenses would 

not include room and board. 8 

An eligible K-12 student would be an individual with respect to whom the taxpayer is 

allowed to claim a personal exemption for the taxable year and who is enrolled in a school that 

provides elementary education or secondary education (kindergarten through grade 12) as 

determined under State law (including a home school). The expenses would be required to be in 

connection with enrollment at a school during the taxable year, or with an academic term 

beginning during the taxable year or during the first three months of the next taxable year. 

The proposal would retain the present-law maximum deduction and adjusted gross 

income limitations applicable to qualified tuition and related expenses for higher education, and 

provide a separate maximum deduction and adjusted gross income limitation applicable to the 

taxpayer’s qualified elementary and secondary education expenses. A taxpayer’s maximum 

 

5

 Sec. 530(b)(4).

6

 For this purpose, special needs services generally would include services required 

because a physical, mental, or emotional condition (including learning disability) of the student 

requires additional time of the student in order to complete his or her education.

7

 Qualified elementary and secondary expenses would not include expenses for computer 

software designed for sports, games, or hobbies unless the software is predominantly educational 

in nature.

8

 The present-law rules regarding coordination of the deduction for qualified tuition and 

related expenses with other education incentives also would apply to qualified elementary and 

secondary expenses.
4

deduction for qualified elementary and secondary education expenses for a taxable year would 

be $3,000 for an individual whose adjusted gross income for the taxable year does not exceed 

$20,000 ($40,000 in the case of a joint return).9 

Effective Date

The proposal would be effective for taxable years beginning after December 31, 2002, 

and before January 1, 2006.

 

9

 No deduction would be allowed an individual whose adjusted gross income exceeds the 

relevant adjusted gross income limitation, a married individual who does not file a joint return, 

or an individual with respect to whom a personal exemption deduction may be claimed by 

another taxpayer for the taxable year.