Looking for feedback on IBR student loans and how to file if married, thanks!

[Coleen3 · Accepted solution]

Yes. If your student loans are in deferment or forbearance then you will still receive your refund. However, if your student loans are in default, then you'll likely end up not receiving your tax refund. You should double check with your loan servicer.

If you want to be really safe, you can file an Injured Spouse Form.

When filing jointly, the Injured Spouse Allocation (Form 8379) lets you recover your portion of your refund that was kept by the IRS to pay your spouse's debt (back taxes, back child support, etc.). Form 8379 can be filed right with your taxes. No special signature is needed.

You must file jointly to use this form. Also, filing an 8379 will delay your federal refund by up to 14 weeks.

To file this form in TurboTax:

1. Sign in and click the Take me to my return button.
2. In the search box, search for injured spouse and then click the "Jump to" link in the search results.
3. Answer Yes to Do you want to claim innocent or injured spouse relief? and carefully follow the onscreen instructions.

Note: Pay close attention to the screens, as some of them apply to innocent spouse relief, which is something else. Leave those questions blank if you only want to claim injured spouse relief.

[housealan]

Thank you

[Coleen3]

Since it isn't really a tax question, I can't answer it. Having said that, it could impact her payment plan. If you have essentially the same result filing separately, then there is no reason not to. There are certain credits you can't take and if one of you itemizes, the other can't take a standard deduction.

[housealan]

Got it. Thanks!

[fanfare]

ist it based on her income or your joint income. ?
filing a tax return does not change your income (unless you falsified previously) so why would it change an income-based plan ?

[housealan]

It's complicated for married people depending on what type of income based student loan you have.

[housealan]

Appreciate everyone's help!

[macuser_22]

For a IBR student loan there are too many variables to give an answer since every situation is different.

The only way to know for sure is to do three test returns, MSJ and MFS and see which is best factoring in the increased loan payments when filing MFJ.

[tammyammi]

The IBR repayment plan, and to my knowledge any and all of the IBR options, will base the borrower's monthly payment on ALL income reported, not just the borrower's income, if the return was filed Married-Joint.  But, if the return is filed Married-Single, it will only base the repayment on "single" borrower's income... Or at least that is how is has always worked out for me.  I have always chosen to take a hit on getting $1000+ less in tax refund by filing Married-Single to get the benefit of a lower student loan payment, sometimes $0.00! Or at least until 2018 when filing Married-Single would've caused both of us to be owing taxes, rather than getting ANY refund, and when we both claim 0 on our W-4's... Him $2500.00/me $1000.00 for whatever the reason that is now! So, I had to file Married-Joint for 2018, to avoid that payment, penalties, interest; ergo now have huge IBR payment.
@fanfare

[xmasbaby0]

@tammyammi For the sake of clarity for anyone else who might read this thread, there is no such thing as filing "married/single."  The correct term is Married filing Separately.