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Do i HAVE to file serperatly from my husband when dealing with income based student loan repayment?

I have student loan debt and have recently entered an income based repayment plan. I was informed by someone who does taxes that I could file a certain form and then file jointly with my husband and that would allow me to not include his income in my repayment plan. I was also told by an individual with the company that arranged my repayment that only filing separately would insure my husbands income wasn't taken into consideration. Help! Which is it?
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3 Replies

Do i HAVE to file serperatly from my husband when dealing with income based student loan repayment?

You need to check with a student loan expert at the department of education or maybe a consultant somewhere.  That's not really a tax question. 

I have seen and handled many questions from student loan borrowers in repayment who are planning to file MFS in order to get lower IBR payments.  This may have advantages on the student loan side, but may cost a significant amount of money on the tax side.  Generally, if you are in IBR for 20 or 25 years, and make on time payments for the entire period, you may qualify for loan forgiveness.  But you could be losing thousands of dollars each year on your taxes, especially once you have kids.  And the forgiven loan balance (when that eventually happens) is taxable income.  I have a feeling that filing MFS to get lower IBR payments is almost always a net loser.  But your experience may be different.

I did a short search and I don't see a provision to file a joint return but also exclude your spouse's income from IBR, but you should ask an expert to be sure. 

http://www.nolo.com/legal-encyclopedia/tax-filing-status-student-loan-payments.html

KrisD
Intuit Alumni

Do i HAVE to file serperatly from my husband when dealing with income based student loan repayment?


It depends on the plan and, for some of the plans, how you and your spouse file your federal income tax return.

REPAYE Plan

Your loan servicer will generally use both your income and your spouse's income to calculate your monthly payment amount, regardless of whether you file a joint federal income tax return or separate federal income tax returns. However, only your individual income will be used to calculate your monthly payment amount if you are separated from your spouse or are unable to reasonably access your spouse's income. If you filed your last tax return jointly with your spouse, you’ll provide alternative documentation of your income, such as a pay stub. If you filed your last tax return separately from your spouse, you can provide your tax return as documentation of your income.

PAYE Plan, IBR Plan, and ICR Plan

If you and your spouse file separate federal income tax returns, your loan servicer will use only your income when determining whether you qualify for the PAYE Plan or the IBR Plan, and when calculating your monthly payment amount under the PAYE, IBR, or ICR plans. If you and your spouse file a joint federal income tax return, your loan servicer will use your joint income when determining your eligibility for the PAYE or IBR plan, and when calculating your payment amount under the PAYE, IBR, or ICR plans. However, only your individual income will be used to calculate your monthly payment amount if you are separated from your spouse or are unable to reasonably access your spouse’s income. In this case, you’ll provide alternative documentation of your income, such as a pay stub.

https://studentaid.ed.gov/sa/sites/default/files/income-driven-repayment-q-and-a.pdf


(edited 2-27-17)



Do i HAVE to file serperatly from my husband when dealing with income based student loan repayment?

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