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Families and Children Manual Section: Financial Eligibility Policy Manual Number: 010.025 Chapter: Expenses Legal Authority: 42 CFR 435.603; Public Law 115-97; Tenn. Comp. R. & Regs. 1200-13-20 1. Policy Statement Individuals are allowed to deduct certain expenses from gross income when determining household income under the Modified Adjusted Gross Income (MAGI) methodology. The expenses allowed under the MAGI methodology correlate to the expenses or deductions permitted by the Internal Revenue Service (IRS) to determine an individual’s adjusted gross income. 2. Expense Types a. Legally Obligated Alimony: Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Alimony expenses do not include voluntary payments. The payment must be in cash, including checks and money orders, to be considered alimony. Alimony paid as a result of a divorce or separation agreement established prior to January 1, 2019 is an expense to the payer of the alimony and is allowed when alimony is paid during the month of application. In accordance with the Tax Cuts and Jobs Act of 2017, alimony paid as a result of a divorce or separation agreement established or modified on or after January 1, 2019 is not a deductible expense. The following payments are not alimony: child support, noncash property settlements, and payments to keep up the payer’s property. b. Student Loan Interest Paid: The Student Loan Interest Paid expense refers to the amount of interest an individual pays out on a qualified student loan payment made during the month of application. Student loan interest includes both required and voluntary interest payments. A qualified student loan is a loan that is taken out solely to pay qualified education expenses that are: for the individual, his spouse or a person who was a dependent when the individual took out the loan; paid or incurred within a reasonable period time before or after the loan was made; and for education provided during an academic period for an eligible student. A qualified student loan is a loan that pays for the following items: tuition and fees; room and board; books, supplies and equipment; and other necessary expenses such as transportation. c. Other As Defined By Policy: The Other As Defined By Policy expense refers to the following expenses as defined by the IRS. The descriptions included in this section are general descriptions.