NCperson
Level 15
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@Sferrer9596 let's look at the 'worst case scenario;

 

first, it is unclear if the $20,000 is per year of medical school or $20,000 spread over 4 years. 

 

If your income is $44,000 less the standard deduction of $27,700, means the taxable income is $16,300 and that puts you in the 10% tax bracket so your tax is $1,630.

 

If your income is $64,000 (adding in the $20,000 benefit per year) less the standard deduction of $27,700, means the taxable income is $36,300 and that puts you in the 12% tax bracket so your tax is $3,916.

 

so the tax burden of a $20,000 benefit is $2286 of additional tax.

 

(If the benefit is $5,000 per year, then the tax on $49,000 is $2,130, so the additional tax is $500. )

 

Don't forget any state taxes. 

 

this is a real gift, but don't panic on the debt or the cash flow. it should work out in spades post residency.  You two have a 6-7 year road ahead of you, but it will pay off hansomely at that point. 

 

On your first question, what you may be missing is that your husband shouldn't need to max out his federal loans.   So, if it is a $20,000 per year benefit, that means your husband should be able to REDUCE what he borrows by around $18,000 (his medical school costs are $20,000 less but you need the cash to pay the tax on that benefit).  You could actually 'splurge a little' and create some living money by not reducing the student loan by the whole $18,000.  If you reduced what he borrows by let's say, $15,000, that leaves $2,000 to pay the additional tax and $3,000 just to help make ends meet. 

 

2) on the 2nd question , check with a student loan couselor at Studentaid.gov.  Your income may still be low enough that it may not impact your student loan payments. (and if it does, borrow some of the money from your husband's medical loans - nothing says that if his tuition is reduced by $20,000, he has to reduce what he borrows by the same $20,000. 

 

does that make sense?

 

DON'T PANIC ðŸ˜‰

 

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