Bill Text: IA HF2139 | 2013-2014 | 85th General Assembly | Introduced
Bill Title: A bill for an act providing an exemption from state individual income tax of certain tuition and related expenses of postsecondary education and including retroactive applicability provisions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-03-18 - Fiscal note. HCS. [HF2139 Detail]
Download: Iowa-2013-HF2139-Introduced.html
House
File
2139
-
Introduced
HOUSE
FILE
2139
BY
WESSEL-KROESCHELL
A
BILL
FOR
An
Act
providing
an
exemption
from
state
individual
income
tax
1
of
certain
tuition
and
related
expenses
of
postsecondary
2
education
and
including
retroactive
applicability
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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2139
Section
1.
Section
422.7,
Code
2014,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
57.
a.
Subtract,
to
the
extent
not
3
otherwise
deducted
in
computing
adjusted
gross
income,
the
4
amounts
paid
by
the
taxpayer
for
qualified
tuition
and
related
5
expenses
of
the
taxpayer
or
taxpayer’s
spouse
or
dependent.
6
b.
A
deduction
shall
not
be
allowed
under
this
subsection
7
to
a
taxpayer
with
respect
to
whom
a
deduction
under
section
8
151
of
the
Internal
Revenue
Code
is
allowable
to
another
9
taxpayer
for
a
tax
year
beginning
in
the
calendar
year
in
which
10
qualified
tuition
and
related
expenses
are
paid.
Any
qualified
11
tuition
and
related
expenses
paid
by
such
dependent
during
said
12
tax
year
shall
be
treated
as
paid
by
such
other
taxpayer
to
13
whom
the
deduction
under
section
151
of
the
Internal
Revenue
14
Code
is
allowable.
15
c.
A
deduction
shall
not
be
allowed
under
this
subsection
16
with
respect
to
the
qualified
tuition
and
related
expenses
of
a
17
taxpayer
if
the
taxpayer
or
any
other
person
claims
an
Iowa
tax
18
credit
calculated
on
the
basis
of
the
same
qualified
tuition
19
and
related
expenses.
20
d.
For
purposes
of
this
subsection:
21
(1)
“Dependent”
has
the
same
meaning
as
provided
by
the
22
Internal
Revenue
Code.
23
(2)
“Qualified
tuition
and
related
expenses”
means
the
same
24
as
defined
in
section
25A(f)
of
the
Internal
Revenue
Code,
with
25
the
following
adjustments:
26
(a)
The
amount
of
such
expenses
shall
be
reduced
in
the
same
27
manner
as
provided
in
section
25A(g)(2)
of
the
Internal
Revenue
28
Code.
29
(b)
The
amount
of
such
expenses
shall
be
reduced
to
the
30
extent
excluded
under
subsection
32
or
33.
31
(c)
To
the
extent
not
already
reduced
under
subparagraph
32
division
(b),
the
amount
of
such
expenses
shall
be
reduced
to
33
the
extent
excluded
from
gross
income
under
section
529(c)(1)
34
of
the
Internal
Revenue
Code,
except
that
the
amount
of
the
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2139
reduction
shall
not
include
that
portion
of
the
distribution
1
which
represents
a
return
of
any
contributions
to
a
qualified
2
tuition
program
qualifying
under
section
529
of
the
Internal
3
Revenue
Code.
4
(d)
The
remaining
amount
of
such
expenses
shall
be
reduced
5
to
the
extent
excluded
from
gross
income
under
section
6
530(d)(2)
of
the
Internal
Revenue
Code.
7
Sec.
2.
Section
422.9,
subsection
2,
Code
2014,
is
amended
8
by
adding
the
following
new
paragraph:
9
NEW
PARAGRAPH
.
j.
If
the
taxpayer
has
a
deduction
for
10
educational
expenses
under
section
162
of
the
Internal
Revenue
11
Code,
the
taxpayer
shall
recompute
for
purposes
of
this
12
subsection
the
amount
of
the
deduction
under
section
162
by
13
excluding
the
amount
subtracted
under
section
422.7,
subsection
14
57.
15
Sec.
3.
RETROACTIVE
APPLICABILITY.
This
Act
applies
16
retroactively
to
January
1,
2014,
for
tax
years
beginning
on
17
or
after
that
date.
18
EXPLANATION
19
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
20
the
explanation’s
substance
by
the
members
of
the
general
assembly.
21
This
bill
allows
taxpayers
to
deduct
from
the
computation
22
of
net
income
for
purposes
of
the
individual
income
tax
23
the
qualified
tuition
and
related
expenses
of
postsecondary
24
education
to
the
extent
not
otherwise
deductible
under
federal
25
law,
and
without
amount
or
income
limitations.
26
Federal
law
currently
provides
a
deduction
for
qualified
27
tuition
and
related
expenses
in
computing
adjusted
gross
28
income,
but
the
deduction
is
subject
to
amount
and
income
29
limitations.
For
tax
year
2013,
the
federal
deduction
is
30
limited
to
$4,000
of
expenses
if
income
does
not
exceed
$65,000
31
for
a
single
taxpayer
or
$130,000
for
married
taxpayers,
and
32
$2,000
of
expenses
if
income
exceeds
$65,000
but
does
not
33
exceed
$80,000
for
a
single
taxpayer,
or
if
income
exceeds
34
$130,000
but
does
not
exceed
$160,000
for
married
taxpayers.
35
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The
federal
deduction
is
set
to
expire
after
the
2013
tax
year.
1
The
bill
defines
“qualified
tuition
and
related
expenses”
2
to
mean
the
same
as
defined
in
Internal
Revenue
Code
section
3
25A(f),
which
includes
tuition
and
fees
required
for
enrollment
4
or
attendance
at
an
eligible
educational
institution
for
5
courses
of
instruction
at
such
institution.
An
eligible
6
educational
institution
generally
includes
all
accredited
7
public,
nonprofit,
and
for-profit
postsecondary
institutions
8
that
are
eligible
to
participate
in
a
federal
financial
aid
9
program
under
title
IV
of
the
federal
Higher
Education
Act
10
of
1965.
Expenses
related
to
any
course
or
other
education
11
involving
sports,
games,
or
hobbies
are
excluded
unless
12
it
is
part
of
the
degree
program,
as
are
student
activity
13
fees,
athletic
fees,
insurance
expenses,
or
other
expenses
14
unrelated
to
the
academic
course
of
instruction.
“Qualified
15
tuition
and
related
expenses”
does
not
include
amounts
16
enumerated
in
Internal
Revenue
Code
section
25A(g)(2),
which
17
includes
expenses
paid
from
tax-exempt
scholarships
or
other
18
payments,
excluding
gifts
or
inheritance,
or
from
certain
19
veterans’
and
armed
forces
educational
assistance
allowances.
20
“Qualified
tuition
and
related
expenses”
also
does
not
include
21
amounts
excluded
from
the
computation
of
Iowa
net
income
as
22
contributions
to
or
earnings
from
an
Iowa
educational
savings
23
plan
trust
under
Iowa
Code
chapter
12D,
or
from
the
computation
24
of
federal
gross
income
as
distributions
of
certain
earnings
25
from
any
qualified
tuition
program
qualifying
under
Internal
26
Revenue
Code
section
529,
or
as
distributions
from
a
Coverdell
27
education
savings
account
qualifying
under
Internal
Revenue
28
Code
section
530.
29
Taxpayers
may
deduct
qualified
tuition
and
related
expenses
30
of
the
taxpayer
or
the
taxpayer’s
spouse
or
dependent.
A
31
taxpayer
who
is
eligible
to
be
claimed
as
a
dependent
by
32
another
is
ineligible
for
the
deduction,
but
any
expenses
paid
33
by
the
dependent
may
be
claimed
as
a
deduction
by
a
taxpayer
34
who
is
eligible
to
claim
the
dependent
for
federal
income
tax
35
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purposes.
1
An
Iowa
tax
credit
currently
does
not
exist
for
the
qualified
2
tuition
and
related
expenses
that
are
the
subject
of
the
bill,
3
but
should
one
be
enacted
the
bill
provides
that
the
deduction
4
provided
in
the
bill
will
be
unavailable
to
those
taxpayers
who
5
claim
a
state
tax
credit
for
the
same
qualified
tuition
and
6
related
expenses.
7
Taxpayers
who
claim
a
deduction
of
educational
expenses
as
8
an
itemized
deduction
under
Code
section
422.9,
subsection
2,
9
are
required
to
reduce
that
deduction
by
the
amount
deducted
10
under
the
bill.
11
The
bill
applies
retroactively
to
tax
years
beginning
on
or
12
after
January
1,
2014.
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