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Frequently Asked Questions

Questions & Answers

What is the American Recovery and Reinvestment Act (ARRA) of 2009?

The American Recovery and Reinvestment Act (ARRA) of 2009 was signed into law by President Obama on February 17, 2009. The bill is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions, including domestic spending in education, health care, and infrastructure, including the energy sector.

Should I notify the IRS of my change of address?

Yes, if you move, you need to notify the IRS of your new address. We can change our records so that any tax refunds due to you or any other IRS communications will reach you in a timely manner. Submit Form 8822, Change of Address, to request an address change.

As a full-time student, am I exempt from federal taxes?

There is no exemption from tax for full-time students. Every U.S. citizen or resident must file a U.S. income tax return if certain income levels are reached. Factors that determine whether you have an income tax filing requirement include:

  • The amount of your income (earned and unearned),
  • Whether you are able to be claimed as a dependent,
  • Your filing status, and
  • Your age.

What types of educational expenses are deductible?

Deductible educational expenses include:

  • Amounts spent for tuition, books, supplies, laboratory fees and similar items.
  • Transportation and travel expenses to attend qualified educational activities may also be deductible.

Are alimony payments considered taxable income?

Alimony, separate maintenance, and similar payments from your spouse or former spouse are taxable to you in the year received:

  • The amount is reported on Form 1040
  • You cannot use Form 1040A or Form 1040EZ

To help determine if these payments are considered alimony, please read the following rules that apply to payments under divorce or separation instruments executed after 1984. They also apply to instruments that were modified after 1984 to specify that the following rules apply or to change the amount or period of payment or to add or delete any contingency or condition.

A payment to or for a spouse or former spouse under a divorce or separation instrument is alimony, if the spouses do not file a joint return with each other, if all the following conditions are met:

  • The payment must be made by cash, check, money order, etc.
  • The instrument does not designate the payments as not includible in the gross income of the recipient spouse and not deductible by the payor spouse.
  • The spouses are not members of the same household at the time the payments are made. Exception: If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree or court order may qualify as alimony even if you are members of the same household at the time of payment.
  • There is no liability for payments after the death of the recipient spouse.
  • The payment is not treated as child support.

Are child support payments considered taxable income?

No, child support payments are neither deductible by the payer nor taxable to the payee. When you total your gross income to see if you are required to file a tax return, do not include child support payments received.

If I pay college tuition and fees with a tax-free scholarship, can I claim an education credit on Form 8863 for those payments?

No, you can not claim a credit for the amount of higher education expenses paid by a tax-free scholarship.