Report Title:

Educational Expenses; Income Tax Credit

 

Description:

Makes 10% of educational expenses from pre-school to college to eligible for a tax credit.

THE SENATE

S.B. NO.

32

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to educational expenses.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statues, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Tax credit for educational expenses. (a) Any taxpayer who files an individual tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual net income tax.

(b) The tax credit shall be ten per cent of the qualified educational expenses paid by taxpayer during a taxable year relating to study by the taxpayer's dependent at qualified educational institutions; provided that the taxpayer pays these expenses in the tax year for which the credit is properly claimed.

(c) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be refunded to the taxpayer; provided that the tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer and provided that no refunds or payments on account of the tax credit allowed by this section shall be made for less than $1.

(d) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91.

(e) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(f) Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed.

(g) If a taxpayer's dependent changes status during a taxable year, so as to be a dependent for less than the full taxable year, or attends an institution other than a qualified educational institution for some portion of the taxable year, then the tax credit allowed under this section shall be computed in a manner that the department of taxation may prescribe in order to properly reflect the credit or portion thereof attributable to the taxable year.

(h) As used in this section:

"Qualified educational expense" means:

(1) Fees or tuition for instruction, including after-school enrichment and tutoring, and driver's education, music and fine arts offered as part of school curriculum regardless of whether taken from a public or private entity, or academic, music and fine arts summer camps in grade- or age-appropriate curricula that supplements curricula and instruction available during the regular school year that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills, and that do not include the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill those tenets, doctrines, or worship;

(2) Expenses for textbooks, books, computer software, rental of musical instruments, and other instructional materials used in elementary schools, secondary schools, and post-secondary schools, excepting those instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill those tenets, doctrines, or worship, and excepting those instructional books and materials used for extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education not offered as part of school curriculum, or similar programs;

(3) Computer hardware and educational software that assists a dependent to improve knowledge of core curriculum areas, or to expand knowledge and skills, purchased for use in the taxpayer's home and not used in a trade or business; and

(4) Fees paid to others for transportation to and from school during the normal school day or for field trips.

"Qualified educational institution" means any pre-school, any elementary, secondary, or vocational-technical public school as defined in section 302A-101 located in this State providing education for kindergarten and grades one to twelve or any part thereof, any elementary, secondary, or technical-vocational private school located in this State providing education for kindergarten and grades one to twelve or part thereof, and any institution of higher education as defined in section 529 of the Internal Revenue Code of 1986, as amended, including community colleges."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2000.

INTRODUCED BY:

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