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2000 SESSION

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SB 336 Income tax credits for educational expenses and contributions.

Introduced by: Stephen H. Martin | all patrons    ...    notes | add to my profiles

SUMMARY AS INTRODUCED:

Income tax credits for educational expenses and contributions. Establishes nonrefundable income tax credits for tuition and other instructional fees charged by a public or private school and for certain fees and costs incurred in association with home schooling. The maximum amount of the credit is 80 percent of the qualifying expenses incurred per child, or 100 percent if the taxpayer is a member of a household whose combined adjusted gross income does not exceed 185 percent of the federal poverty guideline amount.

To qualify for the tax credit for educational expenses, the student for whom the expenses were incurred must be eligible to be enrolled in a public school free of charge, qualify to be claimed as a dependent on the taxpayer's federal tax return, and must not attend a free public school during the period that the expenses were incurred. The maximum amount of the credit for taxpayers who are not in low-income households is capped at $500 for taxable year 2001. In subsequent years, the amount increases by $500 per year until taxable year 2005, when the maximum allowable credit is capped at $2,500. In the case of students enrolled in a qualified school not charging tuition, the credit cannot exceed $550 per child.

The legislation also provides an income tax credit for cash donations to a charitable tax-exempt corporation in Virginia that (i) provides financial assistance up to $3,100 per child for the education of children from low-income households and households in which parents lack sufficient tax liability to claim the personal tax credits allowed by this bill, and (ii) expends all of certain cash contributions as grants to cover qualifying educational expenses of such children. Support for home schooling is limited to $550 per child. The maximum amount of the credit starts at $200 per taxpayer for taxable year 2001, and increases in $100 annual increments thereafter until reaching $500 in 2004. Such contributions cannot be designated for the direct benefit of a specific child. Taxpayers cannot claim both types of credits in the same year. Both types of tax credits become effective for taxable years beginning on or after January 1, 2001. The Department of Taxation is required to promulgate regulations to implement these credits, including providing the format for a standardized receipt to be issued by school tuition organizations and qualifying schools.


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