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jason-cato
New Member

We are trying to recertify my wife's student loan repayment plan. How can we tell if it is more beneficial to file married/jointly or married filing separately?

Her federal student loan payments are unaffordable with both of our incomes. I earn more than she does. Last year, we received $4,100 in federal return. I have no student loans. The house is in her name. We have no children.

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Opus 17
Level 15

We are trying to recertify my wife's student loan repayment plan. How can we tell if it is more beneficial to file married/jointly or married filing separately?

In almost all cases you will lose money on your federal return by filing separately.  The question then becomes, do you lose more in tax than you gain in breathing room on the loans.  Also consider that, unless she is in a public service job that qualifies for loan forgiveness after 10 years, IBR just stretches out the payments so you pay more in the long run AND lose money on your tax returns. If she is in a public service job and you plan on applying for loan forgiveness after 10 years, then you might save more by forgiving the loan than you lose in taxes.  But also remember that the forgiveness qualifications are hard to meet, they will lock her into a job or career that she might not like down the road, if she changes jobs and is disqualified for forgiveness you can't get the lost taxes back, and the forgiven loan balance will be taxable income in the year forgiven.

It's a lot to consider and never a simple answer.  You will need to look at the payment schedules with the Dept of Ed and prepare several test tax returns to decide what the best plan is for you.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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3 Replies
Opus 17
Level 15

We are trying to recertify my wife's student loan repayment plan. How can we tell if it is more beneficial to file married/jointly or married filing separately?

In almost all cases you will lose money on your federal return by filing separately.  The question then becomes, do you lose more in tax than you gain in breathing room on the loans.  Also consider that, unless she is in a public service job that qualifies for loan forgiveness after 10 years, IBR just stretches out the payments so you pay more in the long run AND lose money on your tax returns. If she is in a public service job and you plan on applying for loan forgiveness after 10 years, then you might save more by forgiving the loan than you lose in taxes.  But also remember that the forgiveness qualifications are hard to meet, they will lock her into a job or career that she might not like down the road, if she changes jobs and is disqualified for forgiveness you can't get the lost taxes back, and the forgiven loan balance will be taxable income in the year forgiven.

It's a lot to consider and never a simple answer.  You will need to look at the payment schedules with the Dept of Ed and prepare several test tax returns to decide what the best plan is for you.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
SweetieJean
Level 15

We are trying to recertify my wife's student loan repayment plan. How can we tell if it is more beneficial to file married/jointly or married filing separately?

and your tax situation (and the tax law) can change a lot in 10 years.
nick-demaggio
New Member

We are trying to recertify my wife's student loan repayment plan. How can we tell if it is more beneficial to file married/jointly or married filing separately?

Hi Jason - I asked the same question and this is the answer I got (both link and full text below). Note the additional detail under the "----" lines. 

Original answer Link: https://ttlc.intuit.com/questions/3408611-i-m-trying-to-determine-if-filing-jointly-or-separately-wi...

Original respondant: bluedeb- https://ttlc.intuit.com/users/4824157-bluedeb

ANSWER:

Usually the better option is to file as Married Filing Joint. With the Online version to compare you would need to prepare 3 separate returns, one as Married Filing Joint and one each for Married Filing Separate.  If you file separate with the Online version you would need to prepare two separate returns with two separate accounts.

It is easier to compare the filing status with the Desktop software

If you already created a joint return in the TurboTax CD/Download software, here's a quick way to see how filing separately affects your federal return (this won't work in TurboTax Online):

  1. Open your return and switch to Forms Mode.
  2. Open the What-If Worksheet (it may appear as What-If Wks).
  3. Check the MFJ vs. MFS box at the top.
  4. Scroll down to Balance Due (Refund) located under Line 74.
    • The second column shows the federal outcome for a joint return, and the third and fourth columns, respectively, show the outcome for the taxpayer and spouse if filing separately.
    • Negative numbers are refunds, positive numbers are taxes due.

However, this doesn't give you the whole picture because it doesn't account for your state return. For a true "apples to apples" comparison, you'll need to prepare your returns both ways.


GEN85639

 Answered by TurboTax FAQ to this question

---------------------------------------------------

A quick way to see the difference is to use TurboTax's Tax Caster, enter your information as Married Filing Joint, then go back and enter each of your information as Married Filing Separate

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

--------------------------------------

Married Filing Joint vs. Married Filing Separately

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

When Married Filing Separately Will Save You Taxes

https://turbotax.intuit.com/tax-tools/tax-tips/Family/When-Married-Filing-Separately-Will-Save-You-T...


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