Pros of Filing Separately:
- Lower Student Loan Payments: If your daughter's income is lower than her husband's (or if she has substantial loans compared to her income), excluding his income from the IDR(income driven repayment) calculation can lead to substantial monthly savings on her student loan payments.
-
PSLF Program: By paying less each month, a larger portion of the $100,000 debt will remain at the end of the 10-year PSLF period, which will then be forgiven tax-free.
Cons of Filing Separately:
- Loss of Tax Benefits: Filing separately can result in the loss of certain tax benefits, such as the Earned Income Tax Credit, Child and Dependent Care Credit, Education credits and the ability to deduct student loan interest.
-
Higher Overall Taxes: The combined tax liability for the couple might be higher when filing separately compared to filing jointly
They may have to run the numbers using both filing status & compare the numbers.
@ljb322 Thanks for the question!!
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