Amended in Senate April 11, 2013

Senate Bill No. 693

Introduced by Senator Correa

February 22, 2013

An act begin insert to add and repeal Sections 17052.5 and 17052.7 of the Revenue and Taxation Code, end insert relating to taxation begin insert , to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 693, as amended, Correa. begin delete Income taxes: end delete begin insert Personal income tax: end insert credits: school expenses.

The Personal Income Tax Law begin delete and the Corporation Tax Law allow end delete begin insert allows end insert various credits against the begin delete taxes end delete begin insert tax end insert imposed by begin delete those laws end delete begin insert that law end insert .

begin insert

This bill would, for taxable years beginning on or after January 1, 2014, and before January 1, 2019, allow a credit against that tax to low-income and middle-income parents and guardians for education-related expenses, as defined, not to exceed $500, and a credit against that tax to qualified taxpayers, as defined, for instructional materials and classroom supplies, not to exceed $250.

end insert begin insert

This bill would take effect immediately as a tax levy.

end insert begin delete

This bill would state that it is the intent of the Legislature to enact legislation that would allow credit and deduction for education-related expenses for low-income parents and a refundable credit for costs of instructional and classroom materials paid by low-income teachers, as specified.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 17052.5 is added to the end insert begin insert Revenue and
Taxation Code end insert begin insert , to read: end insert

begin insert

begin insert 17052.5. end insert   

(a) For each taxable year beginning on or after
January 1, 2014, and before January 1, 2019, there shall be
allowed as a credit against the “net tax,” as defined in Section
17039, the qualified amount that was paid or incurred for qualified
education-related expenses for one or more dependent children
by a low-income or middle-income parent or guardian during the
taxable year.

(b) For purposes of this section:

(1) “Dependent children” means children who attend
kindergarten or any grades 1 to 12, inclusive, in California at a
public, charter, or private school that has a current private school
affidavit on file with the State Department of Education in the
taxable year and who meet the requirements of Section
152(c)(1)(B), (D), and (E) of the Internal Revenue Code.

(2) “Qualified amount” means the following:

(A) If the qualified education-related expenses are two hundred
fifty dollars ($250) or less, the amount paid or incurred for those
expenses.

(B) If the qualified education-related expenses are more than
two hundred fifty dollars ($250) and less than one thousand two
hundred fifty dollars ($1,250), two hundred fifty dollars ($250)
plus 25 percent of the difference between the amount paid or
incurred for those expenses and two hundred fifty dollars ($250).

(C) If the qualified education-related expenses are more than
one thousand two hundred fifty dollars ($1,250), five hundred
dollars ($500).

(3) (A) “Qualified education-related expenses” means the costs
of textbooks, school supplies, including, but not limited to, pens,
paper, pencils, notebooks, calculators, and rulers, school uniforms,
computers, computer hardware, and educational computer software
used to learn academic subjects, tuition, tutoring,
psychoeducational diagnostic evaluations to assess the cognitive
and academic abilities of pupils, special education services for
pupils who have an individualized education program or its
equivalent, academic after-school programs, out-of-school
enrichment programs, public transportation, third-party
transportation, and the rental or purchase of educational
equipment required for classes held during the regular school
year.

(B) “Qualified education-related expenses” shall not include
any expenses for the items described in subparagraph (A) that are
used in a trade or business.

(4) “Low-income or middle-income parent or guardian” means
a parent or legal guardian of a full-time pupil who is under 21
years of age at the close of the school year who meets both of the
following requirements:

(A) Both the pupil and the parent or guardian reside in
California when the qualified education-related expenses were
paid or incurred.

(B) The household income does not exceed 300 percent of the
federal Income Eligibility Guidelines published by the Food and
Nutrition Service of the United States Department of Agriculture
for use in determining eligibility for reduced price meals.

(5) “Tuition” means tuition for a private school with
kindergarten or any grades 1 to 12, inclusive, or for college
courses or summer school courses that satisfy high school
graduation requirements.

(c) (1) The credit amount shall be limited to five hundred dollars
($500) per household.

(2) If more than one parent or guardian qualifies for this credit,
the following applies:

(A) The credit shall be allowed to the parent or guardian having
custody for the greater portion of the calendar year.

(B) If the child resides with more than one parent or guardian
for the same amount of time during the taxable year, the parent
or guardian with the highest adjusted gross income shall be
allowed the credit.

(d) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and succeeding four years if necessary,
until the credit is exhausted.

(e) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

(f) This section shall remain in effect only until December 1,
2019, and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2019, deletes or extends that
date.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 17052.7 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 17052.7. end insert   

(a) For each taxable year beginning on or after
January 1, 2014, and before January 1, 2019, there shall be
allowed as a credit against the “net tax,” as defined in Section
17039, an amount equal to the amount paid or incurred by a
qualified taxpayer during the taxable year for instructional
materials and classroom supplies, not to exceed two hundred fifty
dollars ($250).

(b) For purposes of this section:

(1) “Instructional materials and classroom supplies” means
any unreimbursed expenses, otherwise deductible as a trade or
business expense, for books, supplies, computer equipment,
including related software and services and other equipment, and
supplementary materials used in the classroom.

(2) “Qualified taxpayer” means a person who works at least
900 hours in the school year as a teacher, instructor, counselor,
principal, or aide in a school for kindergarten or any grades 1 to
12, inclusive.

(c) A qualified taxpayer shall be allowed this credit only for the
first three years of employment as a teacher, instructor, counselor,
principal, or aide in a school for kindergarten or any grades 1 to
12, inclusive.

(d) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and succeeding four years if necessary,
until the credit is exhausted.

(e) (1) The Franchise Tax Board may prescribe rules,
guidelines, or procedures necessary or appropriate to carry out
the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

(f) This section shall remain in effect only until December 1,
2019, and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2019, deletes or extends that
date.

end insert

begin insert

begin insert SEC. end insert begin insert 3. end insert   

end insert begin insert

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact
legislation that would allow the following:

(a) A personal income tax credit or deduction for low-income
parents for education-related expenses, including, but not limited
to, tuition, textbooks, uniforms, computer hardware and educational
software, tutors, transportation, and other nontuition educational
expenses, for dependent children in kindergarten and grades 1 to
12, inclusive, attending private or public schools or homeschooling.

(b) A refundable personal income tax credit for the costs of
instructional materials and classroom supplies paid by low-income
teachers of kindergarten and grades 1 to 12, inclusive, in public
and private schools.

end delete