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Indiana House Bill HB1045

Indiana 2022 Regular Session

Indiana House Bill HB1045 Compare Versions

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1+*HB1045.1*
2+January 10, 2022
3+HOUSE BILL No. 1045
4+_____
5+DIGEST OF HB 1045 (Updated January 6, 2022 2:24 pm - DI 134)
6+Citations Affected: IC 6-3; noncode.
7+Synopsis: 529 college savings accounts. Increases the maximum
8+amount of the annual credit against adjusted gross income to which a
9+taxpayer is entitled for a contribution to a college choice 529 education
10+savings plan. Provides that a taxpayer shall be deemed to have made a
11+contribution to a college choice 529 education savings plan on the last
12+day of the preceding taxable year if the contribution is made not later
13+than the time prescribed by law for filing the return for such taxable
14+year (not including extensions).
15+Effective: July 1, 2022.
16+Heine
17+January 4, 2022, read first time and referred to Committee on Ways and Means.
18+January 10, 2022, amended, reported — Do Pass.
19+HB 1045—LS 6530/DI 129 January 10, 2022
120 Second Regular Session of the 122nd General Assembly (2022)
221 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
322 Constitution) is being amended, the text of the existing provision will appear in this style type,
423 additions will appear in this style type, and deletions will appear in this style type.
524 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
625 provision adopted), the text of the new provision will appear in this style type. Also, the
726 word NEW will appear in that style type in the introductory clause of each SECTION that adds
827 a new provision to the Indiana Code or the Indiana Constitution.
928 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
1029 between statutes enacted by the 2021 Regular Session of the General Assembly.
11-HOUSE ENROLLED ACT No. 1045
12-AN ACT to amend the Indiana Code concerning taxation.
30+HOUSE BILL No. 1045
31+A BILL FOR AN ACT to amend the Indiana Code concerning
32+taxation.
1333 Be it enacted by the General Assembly of the State of Indiana:
14-SECTION 1. IC 6-3-3-12, AS AMENDED BY P.L.154-2020,
15-SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
16-JULY 1, 2022]: Sec. 12. (a) As used in this section, "account" has the
17-meaning set forth in IC 21-9-2-2.
18-(b) As used in this section, "account beneficiary" has the meaning
19-set forth in IC 21-9-2-3.
20-(c) As used in this section, "account owner" has the meaning set
21-forth in IC 21-9-2-4.
22-(d) As used in this section, "college choice 529 education savings
23-plan" refers to a college choice 529 plan established under IC 21-9.
24-(e) As used in this section, "contribution" means the amount of
25-money directly provided to a college choice 529 education savings plan
26-account by a taxpayer. A contribution does not include any of the
27-following:
28-(1) Money credited to an account as a result of bonus points or
29-other forms of consideration earned by the taxpayer that result in
30-a transfer of money to the account.
31-(2) Money transferred from any other qualified tuition program
32-under Section 529 of the Internal Revenue Code or from any other
33-similar plan.
34-(3) Money that is credited to an account and that will be
35-transferred to an ABLE account (as defined in Section 529A of
36-HEA 1045 — Concur 2
37-the Internal Revenue Code).
38-(f) As used in this section, "nonqualified withdrawal" means a
39-withdrawal or distribution from a college choice 529 education savings
40-plan that is not a qualified withdrawal.
41-(g) As used in this section, "qualified higher education expenses"
42-has the meaning set forth in IC 21-9-2-19.5, except that the term does
43-not include qualified education loan repayments under Section
44-529(c)(9) of the Internal Revenue Code.
45-(h) As used in this section, "qualified K-12 education expenses"
46-means expenses that are for tuition in connection with enrollment or
47-attendance at an elementary or secondary public, private, or religious
48-school located in Indiana and are permitted under Section 529 of the
49-Internal Revenue Code.
50-(i) As used in this section, "qualified withdrawal" means a
51-withdrawal or distribution from a college choice 529 education savings
52-plan that is made:
53-(1) to pay for qualified higher education expenses, excluding any
54-withdrawals or distributions used to pay for qualified higher
55-education expenses, if the withdrawals or distributions are made
56-from an account of a college choice 529 education savings plan
57-that is terminated within twelve (12) months after the account is
58-opened;
59-(2) as a result of the death or disability of an account beneficiary;
60-(3) because an account beneficiary received a scholarship that
61-paid for all or part of the qualified higher education expenses of
62-the account beneficiary, to the extent that the withdrawal or
63-distribution does not exceed the amount of the scholarship; or
64-(4) by a college choice 529 education savings plan as the result of
65-a transfer of funds by a college choice 529 education savings plan
66-from one (1) third party custodian to another.
67-However, a qualified withdrawal does not include a withdrawal or
68-distribution that will be used for expenses that are for tuition in
69-connection with enrollment or attendance at an elementary or
70-secondary public, private, or religious school unless the school is
71-located in Indiana. A qualified withdrawal does not include a rollover
72-distribution or transfer of assets from a college choice 529 education
73-savings plan to any other qualified tuition program under Section 529
74-of the Internal Revenue Code or to any other similar plan.
75-(j) As used in this section, "taxpayer" means:
76-(1) an individual filing a single return;
77-(2) a married couple filing a joint return; or
78-(3) for taxable years beginning after December 31, 2019, a
79-HEA 1045 — Concur 3
80-married individual filing a separate return.
81-(k) A taxpayer is entitled to a credit against the taxpayer's adjusted
82-gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
83-year equal to the least of the following:
84-(1) The following amount:
85-(A) For taxable years beginning before January 1, 2019, the
86-sum of twenty percent (20%) multiplied by the amount of the
87-total contributions that are made by the taxpayer to an account
88-or accounts of a college choice 529 education savings plan
89-during the taxable year and that will be used to pay for
90-qualified higher education expenses that are not qualified K-12
91-education expenses, plus the lesser of:
92-(i) five hundred dollars ($500); or
93-(ii) ten percent (10%) multiplied by the amount of the total
94-contributions that are made by the taxpayer to an account or
95-accounts of a college choice 529 education savings plan
96-during the taxable year and that will be used to pay for
97-qualified K-12 education expenses.
98-(B) For taxable years beginning after December 31, 2018, the
99-sum of:
100-(i) twenty percent (20%) multiplied by the amount of the
101-total contributions that are made by the taxpayer to an
102-account or accounts of a college choice 529 education
103-savings plan during the taxable year and that are designated
104-to pay for qualified higher education expenses that are not
105-qualified K-12 education expenses; plus
106-(ii) twenty percent (20%) multiplied by the amount of the
107-total contributions that are made by the taxpayer to an
108-account or accounts of a college choice 529 education
109-savings plan during the taxable year and that are designated
110-to pay for qualified K-12 education expenses.
111-(2) One thousand five hundred dollars ($1,000), ($1,500), or five
112-seven hundred fifty dollars ($500) ($750) in the case of a married
113-individual filing a separate return.
114-(3) The amount of the taxpayer's adjusted gross income tax
115-imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
116-reduced by the sum of all credits (as determined without regard to
117-this section) allowed by IC 6-3-1 through IC 6-3-7.
118-(l) This subsection applies after December 31, 2018. At the time a
119-contribution is made to or a withdrawal is made from an account or
120-accounts of a college choice 529 education savings plan, the person
121-making the contribution or withdrawal shall designate whether the
122-HEA 1045 — Concur 4
123-contribution is made for or the withdrawal will be used for:
124-(1) qualified higher education expenses that are not qualified
125-K-12 education expenses; or
126-(2) qualified K-12 education expenses.
127-The Indiana education savings authority (IC 21-9-3) shall use
128-subaccounting to track the designations.
129-(m) A taxpayer who makes a contribution to a college choice 529
130-education savings plan is considered to have made the contribution on
131-the date that:
132-(1) the taxpayer's contribution is postmarked or accepted by a
133-delivery service, for contributions that are submitted to a college
134-choice 529 education savings plan by mail or delivery service; or
135-(2) the taxpayer's electronic funds transfer is initiated, for
136-contributions that are submitted to a college choice 529 education
137-savings plan by electronic funds transfer.
138-(n) A taxpayer is not entitled to a carryback, carryover, or refund of
139-an unused credit.
140-(o) A taxpayer may not sell, assign, convey, or otherwise transfer the
141-tax credit provided by this section.
142-(p) To receive the credit provided by this section, a taxpayer must
143-claim the credit on the taxpayer's annual state tax return or returns in
144-the manner prescribed by the department. The taxpayer shall submit to
145-the department all information that the department determines is
146-necessary for the calculation of the credit provided by this section.
147-(q) An account owner of an account of a college choice 529
148-education savings plan must repay all or a part of the credit in a taxable
149-year in which any nonqualified withdrawal is made from the account.
150-The amount the taxpayer must repay is equal to the lesser of:
151-(1) twenty percent (20%) of the total amount of nonqualified
152-withdrawals made during the taxable year from the account; or
153-(2) the excess of:
154-(A) the cumulative amount of all credits provided by this
155-section that are claimed by any taxpayer with respect to the
156-taxpayer's contributions to the account for all prior taxable
157-years beginning on or after January 1, 2007; over
158-(B) the cumulative amount of repayments paid by the account
159-owner under this subsection for all prior taxable years
160-beginning on or after January 1, 2008.
161-(r) Any required repayment under subsection (q) shall be reported
162-by the account owner on the account owner's annual state income tax
163-return for any taxable year in which a nonqualified withdrawal is made.
164-(s) A nonresident account owner who is not required to file an
165-HEA 1045 — Concur 5
166-annual income tax return for a taxable year in which a nonqualified
167-withdrawal is made shall make any required repayment on the form
168-required under IC 6-3-4-1(2). If the nonresident account owner does
169-not make the required repayment, the department shall issue a demand
170-notice in accordance with IC 6-8.1-5-1.
171-(t) The executive director of the Indiana education savings authority
172-shall submit or cause to be submitted to the department a copy of all
173-information returns or statements issued to account owners, account
174-beneficiaries, and other taxpayers for each taxable year with respect to:
175-(1) nonqualified withdrawals made from accounts, including
176-subaccounts of a college choice 529 education savings plan for
177-the taxable year; or
178-(2) account closings for the taxable year.
179-SECTION 2. [EFFECTIVE JULY 1, 2022] (a) IC 6-3-3-12, as
180-amended by this act, applies to taxable years beginning after
181-December 31, 2022.
182-(b) This SECTION expires July 1, 2025.
183-HEA 1045 — Concur Speaker of the House of Representatives
184-President of the Senate
185-President Pro Tempore
186-Governor of the State of Indiana
187-Date: Time:
188-HEA 1045 — Concur
34+1 SECTION 1. IC 6-3-3-12, AS AMENDED BY P.L.154-2020,
35+2 SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
36+3 JULY 1, 2022]: Sec. 12. (a) As used in this section, "account" has the
37+4 meaning set forth in IC 21-9-2-2.
38+5 (b) As used in this section, "account beneficiary" has the meaning
39+6 set forth in IC 21-9-2-3.
40+7 (c) As used in this section, "account owner" has the meaning set
41+8 forth in IC 21-9-2-4.
42+9 (d) As used in this section, "college choice 529 education savings
43+10 plan" refers to a college choice 529 plan established under IC 21-9.
44+11 (e) As used in this section, "contribution" means the amount of
45+12 money directly provided to a college choice 529 education savings plan
46+13 account by a taxpayer. A contribution does not include any of the
47+14 following:
48+15 (1) Money credited to an account as a result of bonus points or
49+16 other forms of consideration earned by the taxpayer that result in
50+17 a transfer of money to the account.
51+HB 1045—LS 6530/DI 129 2
52+1 (2) Money transferred from any other qualified tuition program
53+2 under Section 529 of the Internal Revenue Code or from any other
54+3 similar plan.
55+4 (3) Money that is credited to an account and that will be
56+5 transferred to an ABLE account (as defined in Section 529A of
57+6 the Internal Revenue Code).
58+7 (f) As used in this section, "nonqualified withdrawal" means a
59+8 withdrawal or distribution from a college choice 529 education savings
60+9 plan that is not a qualified withdrawal.
61+10 (g) As used in this section, "qualified higher education expenses"
62+11 has the meaning set forth in IC 21-9-2-19.5, except that the term does
63+12 not include qualified education loan repayments under Section
64+13 529(c)(9) of the Internal Revenue Code.
65+14 (h) As used in this section, "qualified K-12 education expenses"
66+15 means expenses that are for tuition in connection with enrollment or
67+16 attendance at an elementary or secondary public, private, or religious
68+17 school located in Indiana and are permitted under Section 529 of the
69+18 Internal Revenue Code.
70+19 (i) As used in this section, "qualified withdrawal" means a
71+20 withdrawal or distribution from a college choice 529 education savings
72+21 plan that is made:
73+22 (1) to pay for qualified higher education expenses, excluding any
74+23 withdrawals or distributions used to pay for qualified higher
75+24 education expenses, if the withdrawals or distributions are made
76+25 from an account of a college choice 529 education savings plan
77+26 that is terminated within twelve (12) months after the account is
78+27 opened;
79+28 (2) as a result of the death or disability of an account beneficiary;
80+29 (3) because an account beneficiary received a scholarship that
81+30 paid for all or part of the qualified higher education expenses of
82+31 the account beneficiary, to the extent that the withdrawal or
83+32 distribution does not exceed the amount of the scholarship; or
84+33 (4) by a college choice 529 education savings plan as the result of
85+34 a transfer of funds by a college choice 529 education savings plan
86+35 from one (1) third party custodian to another.
87+36 However, a qualified withdrawal does not include a withdrawal or
88+37 distribution that will be used for expenses that are for tuition in
89+38 connection with enrollment or attendance at an elementary or
90+39 secondary public, private, or religious school unless the school is
91+40 located in Indiana. A qualified withdrawal does not include a rollover
92+41 distribution or transfer of assets from a college choice 529 education
93+42 savings plan to any other qualified tuition program under Section 529
94+HB 1045—LS 6530/DI 129 3
95+1 of the Internal Revenue Code or to any other similar plan.
96+2 (j) As used in this section, "taxpayer" means:
97+3 (1) an individual filing a single return;
98+4 (2) a married couple filing a joint return; or
99+5 (3) for taxable years beginning after December 31, 2019, a
100+6 married individual filing a separate return.
101+7 (k) A taxpayer is entitled to a credit against the taxpayer's adjusted
102+8 gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
103+9 year equal to the least of the following:
104+10 (1) The following amount:
105+11 (A) For taxable years beginning before January 1, 2019, the
106+12 sum of twenty percent (20%) multiplied by the amount of the
107+13 total contributions that are made by the taxpayer to an account
108+14 or accounts of a college choice 529 education savings plan
109+15 during the taxable year and that will be used to pay for
110+16 qualified higher education expenses that are not qualified K-12
111+17 education expenses, plus the lesser of:
112+18 (i) five hundred dollars ($500); or
113+19 (ii) ten percent (10%) multiplied by the amount of the total
114+20 contributions that are made by the taxpayer to an account or
115+21 accounts of a college choice 529 education savings plan
116+22 during the taxable year and that will be used to pay for
117+23 qualified K-12 education expenses.
118+24 (B) For taxable years beginning after December 31, 2018, the
119+25 sum of:
120+26 (i) twenty percent (20%) multiplied by the amount of the
121+27 total contributions that are made by the taxpayer to an
122+28 account or accounts of a college choice 529 education
123+29 savings plan during the taxable year and that are designated
124+30 to pay for qualified higher education expenses that are not
125+31 qualified K-12 education expenses; plus
126+32 (ii) twenty percent (20%) multiplied by the amount of the
127+33 total contributions that are made by the taxpayer to an
128+34 account or accounts of a college choice 529 education
129+35 savings plan during the taxable year and that are designated
130+36 to pay for qualified K-12 education expenses.
131+37 For purposes of clause (B), a taxpayer shall be deemed to have
132+38 made a contribution to an account or accounts of a college
133+39 choice 529 education savings plan on the last day of the
134+40 preceding taxable year if the contribution is made on account
135+41 of such taxable year and is made not later than the time
136+42 prescribed by law for filing the return for such taxable year
137+HB 1045—LS 6530/DI 129 4
138+1 (not including extensions).
139+2 (2) One thousand five hundred dollars ($1,000), ($1,500), or five
140+3 seven hundred fifty dollars ($500) ($750) in the case of a married
141+4 individual filing a separate return.
142+5 (3) The amount of the taxpayer's adjusted gross income tax
143+6 imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
144+7 reduced by the sum of all credits (as determined without regard to
145+8 this section) allowed by IC 6-3-1 through IC 6-3-7.
146+9 (l) This subsection applies after December 31, 2018. At the time a
147+10 contribution is made to or a withdrawal is made from an account or
148+11 accounts of a college choice 529 education savings plan, the person
149+12 making the contribution or withdrawal shall designate whether the
150+13 contribution is made for or the withdrawal will be used for:
151+14 (1) qualified higher education expenses that are not qualified
152+15 K-12 education expenses; or
153+16 (2) qualified K-12 education expenses.
154+17 The Indiana education savings authority (IC 21-9-3) shall use
155+18 subaccounting to track the designations.
156+19 (m) A taxpayer who makes a contribution to a college choice 529
157+20 education savings plan is considered to have made the contribution on
158+21 the date that:
159+22 (1) the taxpayer's contribution is postmarked or accepted by a
160+23 delivery service, for contributions that are submitted to a college
161+24 choice 529 education savings plan by mail or delivery service; or
162+25 (2) the taxpayer's electronic funds transfer is initiated, for
163+26 contributions that are submitted to a college choice 529 education
164+27 savings plan by electronic funds transfer.
165+28 (n) A taxpayer is not entitled to a carryback, carryover, or refund of
166+29 an unused credit.
167+30 (o) A taxpayer may not sell, assign, convey, or otherwise transfer the
168+31 tax credit provided by this section.
169+32 (p) To receive the credit provided by this section, a taxpayer must
170+33 claim the credit on the taxpayer's annual state tax return or returns in
171+34 the manner prescribed by the department. The taxpayer shall submit to
172+35 the department all information that the department determines is
173+36 necessary for the calculation of the credit provided by this section.
174+37 (q) An account owner of an account of a college choice 529
175+38 education savings plan must repay all or a part of the credit in a taxable
176+39 year in which any nonqualified withdrawal is made from the account.
177+40 The amount the taxpayer must repay is equal to the lesser of:
178+41 (1) twenty percent (20%) of the total amount of nonqualified
179+42 withdrawals made during the taxable year from the account; or
180+HB 1045—LS 6530/DI 129 5
181+1 (2) the excess of:
182+2 (A) the cumulative amount of all credits provided by this
183+3 section that are claimed by any taxpayer with respect to the
184+4 taxpayer's contributions to the account for all prior taxable
185+5 years beginning on or after January 1, 2007; over
186+6 (B) the cumulative amount of repayments paid by the account
187+7 owner under this subsection for all prior taxable years
188+8 beginning on or after January 1, 2008.
189+9 (r) Any required repayment under subsection (q) shall be reported
190+10 by the account owner on the account owner's annual state income tax
191+11 return for any taxable year in which a nonqualified withdrawal is made.
192+12 (s) A nonresident account owner who is not required to file an
193+13 annual income tax return for a taxable year in which a nonqualified
194+14 withdrawal is made shall make any required repayment on the form
195+15 required under IC 6-3-4-1(2). If the nonresident account owner does
196+16 not make the required repayment, the department shall issue a demand
197+17 notice in accordance with IC 6-8.1-5-1.
198+18 (t) The executive director of the Indiana education savings authority
199+19 shall submit or cause to be submitted to the department a copy of all
200+20 information returns or statements issued to account owners, account
201+21 beneficiaries, and other taxpayers for each taxable year with respect to:
202+22 (1) nonqualified withdrawals made from accounts, including
203+23 subaccounts of a college choice 529 education savings plan for
204+24 the taxable year; or
205+25 (2) account closings for the taxable year.
206+26 SECTION 2. [EFFECTIVE JULY 1, 2022] (a) IC 6-3-3-12, as
207+27 amended by this act, applies to taxable years beginning after
208+28 December 31, 2022.
209+29 (b) This SECTION expires July 1, 2025.
210+HB 1045—LS 6530/DI 129 6
211+COMMITTEE REPORT
212+Mr. Speaker: Your Committee on Ways and Means, to which was
213+referred House Bill 1045, has had the same under consideration and
214+begs leave to report the same back to the House with the
215+recommendation that said bill be amended as follows:
216+Page 3, between lines 36 and 37, begin a new line block indented
217+and insert:
218+"For purposes of clause (B), a taxpayer shall be deemed to
219+have made a contribution to an account or accounts of a
220+college choice 529 education savings plan on the last day of
221+the preceding taxable year if the contribution is made on
222+account of such taxable year and is made not later than the
223+time prescribed by law for filing the return for such taxable
224+year (not including extensions).".
225+and when so amended that said bill do pass.
226+(Reference is to HB 1045 as introduced.)
227+BROWN T
228+Committee Vote: yeas 24, nays 0.
229+HB 1045—LS 6530/DI 129