To amend the Internal Revenue Code of 1986 to encourage the use of 529 plans and Coverdell education savings accounts, and for other purposes.

Bill: 114-hr-553
Sponsor: full_name: Rep. Messer, Luke [R-IN-6]
Introduced: 2015-01-27
Policy area: Taxation
Subjects: Elementary and secondary education

Higher education

Income tax exclusion

Preschool education

Student aid and college costs
Latest action: action_date: 2015-01-27
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2015-01-27
action_desc: Introduced in House
text: <p>Amends the Internal Revenue Code to: (1) allow payment of home school expenses from Coverdell education savings accounts; (2) remove the dollar limitation on contributions to Coverdell education savings accounts and require such accounts to provide adequate safeguards to prevent contributions from exceeding the amount necessary to provide for the qualified education expenses of the account beneficiary; and (3) allow tax-exempt qualified tuition programs (529 tuition programs) to pay qualified pre-kindergarten, elementary, and secondary education expenses.</p>

tv_txt: I 114th CONGRESS 1st Session H. R. 553 IN THE HOUSE OF REPRESENTATIVES January 27, 2015 Mr. Messer 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 encourage the use of 529 plans and Coverdell education savings accounts, and for other purposes.

1. Allowance of home school expenses as qualified education expenses for purposes of a Coverdell Education Savings Account (a) In General Section 530(b)(3) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (C) Private school For purposes of this section, the term ‘private school’ includes any home school that meets the requirements of State law applicable to such home schools, whether or not such school is deemed a private school for purposes of State law. . (b) Effective Date The amendment made by this section shall apply to taxable years beginning after December 31, 2014. 2. Elimination of Coverdell Education Savings Account contribution limitation (a) In general Section 530(b)(1)(A) of the Internal Revenue Code of 1986 is amended by inserting or at the end of clause (i), by striking or at the end of clause (ii) and inserting a period, and by striking clause (iii). (b) Prohibition on excess contributions Section 530(b) of such Code is amended by adding at the end the following new paragraph: (5) Prohibition on excess contributions A program shall not be treated as a Coverdell education savings account unless it provides adequate safeguards to prevent contributions on behalf of a designated beneficiary in excess of those necessary to provide for the qualified education expenses of the beneficiary. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2014. 3. 529 programs for pre-kindergarten, elementary, and secondary education expenses (a) In general Section 529(e)(3) of the Internal Revenue Code of 1986 is amended— (1) by redesignating subparagraph (B) as subparagraph (C); (2) by striking Qualified higher education expenses and all that follows through The term qualified higher education expenses means— and inserting the following: Qualified education expenses.— (A) In general The term qualified education expenses means— (i) qualified higher education expenses, and (ii) qualified pre-kindergarten, elementary, and secondary education expenses. (B) Qualified higher education expenses The term qualified higher education expenses means ; and (3) by adding at the end the following new subparagraphs: (D) Qualified pre-kindergarten, elementary, and secondary education expenses The term qualified pre-kindergarten, elementary, and secondary education expenses means— (i) expenses for tuition, fees, academic tutoring, special needs services in the case of a special needs beneficiary, books, supplies, and other equipment which are incurred in connection with the enrollment or attendance of the designated beneficiary of the trust as a pre-kindergarten, elementary, or secondary school student at a public, private, or religious school, (ii) expenses for room and board, uniforms, transportation, and supplementary items and services (including extended day programs) which are required or provided by a public, private, or religious school in connection with such enrollment or attendance, and (iii) expenses for the purchase of any computer technology or equipment (as defined in section 170(e)(6)(F)(i)) or Internet access and related services, if such technology, equipment, or services are to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is in school. Clause (iii) shall not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature. (E) School The term school means any school which provides pre-kindergarten, elementary, or secondary education (pre-kindergarten through grade 12), as determined under State law. Such a school shall be treated as an eligible educational institution for purposes of subsection (b). . (b) Conforming amendments Section 529 of such Code is amended by striking qualified higher education each place it appears in subsections (b) and (c) and inserting qualified education . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2014.