I
107TH CONGRESS
2D SESSION
H. R. 3685
To amend the Internal Revenue Code of 1986 to allow a refundable credit
against income tax for educational expenses incurred for each qualifying
child of the taxpayer in attending public or private elementary or sec-
ondary school.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 5, 2002
Mr. SMITH of New Jersey 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 allow a
refundable credit against income tax for educational ex-
penses incurred for each qualifying child of the taxpayer
in attending public or private elementary or secondary
school.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Education, Achieve-
ment, and Opportunity Act’’.
SEC. 2. CREDIT FOR ELEMENTARY AND SECONDARY EDU-
CATION EXPENSES.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. ELEMENTARY AND SECONDARY EDUCATION EX-
PENSES.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN
GENERAL.—In the case of an indi-
vidual, 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 each quali-
fying child of the taxpayer.
‘‘(2) AMOUNT
PER
CHILD.—The amount of
credit allowable under paragraph (1) for any taxable
year with respect to the qualified education expenses
of each qualifying child of the taxpayer shall not
exceed—
‘‘(A) $2,500 for a child enrolled in an ele-
mentary school for any portion of the taxable
year, and
‘‘(B) $3,500 for a child enrolled in a sec-
ondary school for any portion of the taxable
year.
In any taxable year in which a child meets the re-
quirements of both subparagraphs (A) and (B), the
amount of credit allowable shall not exceed the sum
of the amounts in such subparagraphs.
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—The amount of the credit allowable under sub-
section (a) (after the application of subsection (a)(2)) shall
be reduced (but not below zero) by $50 for each $1,000
(or fraction thereof) by which the taxpayer’s modified ad-
justed gross income exceeds the threshold amount. For
purposes of this subsection—
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) $150,000 in the case of a joint re-
turn, and
‘‘(B) $75,000 in any other case.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income increased by any amount ex-
cluded from gross income under section 911, 931, or
933.
‘‘(3) MARITAL STATUS.—Marital status shall be
determined under section 7703.
‘‘(c) SPECIAL RULE RELATED TO HOME SCHOOL-
ING.—In the case of education furnished to a child in a
home, the credit under subsection (a) is allowable for a
taxable year only if the child takes any applicable student
achievement exam that all children enrolled in the nearest
public school would ordinarily be required to take during
the academic year beginning during the taxable year.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFYING CHILD.—The term ‘qualifying
child’ has the meaning provided by section 24(c).
‘‘(2) 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 a
qualified educational institution,
‘‘(ii) computers, educational software,
computer support services, and books re-
quired for courses of instruction at a quali-
fied educational institution,
‘‘(iii) academic tutoring (by a person
other than the taxpayer),
‘‘(iv) special needs services for quali-
fying children with disabilities (within the
meaning of the Americans With Disabil-
ities Act of 1990),
‘‘(v) fees for transportation services to
and from a private school, if the transpor-
tation is provided by the school and the
school charges a fee for the transportation,
and
‘‘(vi) academic testing services.
‘‘(B) AMOUNTS
EXCLUDED.—The term
does not include special school fees for nonaca-
demic purposes, including fees for student ac-
tivities, athletics, insurance, school uniforms,
and nonacademic after-school activities.
‘‘(3) QUALIFIED EDUCATIONAL INSTITUTION.—
The term ‘qualified educational institution’ means—
‘‘(A) an elementary or secondary school (as
defined in section 14101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
8801)), or
‘‘(B) any private, parochial, religious, or
home school organized for the purpose of pro-
viding elementary or secondary education, or
both.’’.
(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 Education, Achievement, and Op-
portunity 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. Elementary and secondary education expenses.
‘‘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.
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