Student Loans and Taxes

posted 3 years ago in Legal
Post # 3
Member
1549 posts
Bumble bee
  • Wedding: June 2013

File jointly. all you’d lose is his IBR (because they’ll count your salary)  which isn’t a huge loss but you’re going to get better tax rates etc everywhere else including the 2500 deduction.

 

Its going to make his student loan payments go up most likely. But if you switch and put his loans on Graduated repayment then it shouldn’t be that much higher monthly right now. Graduated gives you a low payment right now and then every 2 years it goes up when you hopefully will be making more money. IBR should only be used short term anyway until you make more money. Unless his income potential is extremely low in comparison to his student loans…. You’re definitely going to get the loans paid off in 25 years and then your just paying loads in interest. I’m talking easily Double the current principle.

This is all federally filing so it will be the same in most states.

Post # 4
Member
3344 posts
Sugar bee
  • Wedding: April 2013 - Rhode Island

I don’t have a comment on filing separately vs jointly.  But I just wanted to pop in and say that you can take a student loan interest deduction when filing on your own.  It’s an above the line deduction, and I’ve been doing it every year that I’ve been single.

Post # 6
Hostess
24457 posts
Honey Beekeeper
  • Wedding: June 2009

If you can’t afford to pay the payments anyway, I don’t see what other option you have because the tax savings won’t be enough to make up for an increase of payments that you can’t afford.

Normally, I don’t recommend filing separately but I don’t know if you have a choice.

Post # 7
Member
1157 posts
Bumble bee
  • Wedding: October 2014

@abbie017:  Oh NO now you have me worried…married filing separately doesn’t allow you to deduct student loan interest?!?  We won’t be dealing with this until next year thankfully but as of right now, we both max out the $2500 deduction…boo that sucks!

Post # 9
Member
1312 posts
Bumble bee
  • Wedding: March 2015

@abbie017:  I’m sorry, I don’t have any advice…but can you still get a loan interest deduction if married, filing separately, and only one person has loans? Curious, I’m the one with law school loans (FI has none) and we will have to decide whether to file jointly or separately after we get married. Not on IBR though, I have the 10 yr plan too.

Post # 11
Member
1312 posts
Bumble bee
  • Wedding: March 2015

@abbie017:  Ah ok, thanks for the info. That sucks!!

I think if you and the other Bees are right, you guys need to file jointly and just give up IBR and make some lifestyle sacrifices. Good luck!

Post # 12
Member
3344 posts
Sugar bee
  • Wedding: April 2013 - Rhode Island

@abbie017:  Wow, that sucks.  Can you go to H&R Block or someplace like that and get the opinion of a tax attorney/CPA?  I feel like you need reliable advice tailored to your specific situation.  I’m not sure you can get that here from the bee.

Post # 14
Member
1549 posts
Bumble bee
  • Wedding: June 2013

@abbie017: Theres a lot of different payment plans… I’d have him call his student loan company and find out other payment plan options…. I could never afford standard repayment on my loans either but IBR isn’t always the cheapest.

If he has loans over 35k which i’m assuming he does then you can also get Extended repayment (stretches it out to 25 years) or Graduated Extended Which does the Graduated plan but bases it on a 25 year payoff instead of 10.

Heres a very simply calculator for graduated repayment.

http://www.aie.org/paying-for-college/repayment-plans/graduated-repayment-calculator.cfm

Another thing to remember is the payment plans can always be changed and readjusted as your needs and finances change. I plan on keeping my loans on graduated until the payment gets up as high as the amount of standard repayment and then switching it to standard (its based on 10 years from the current  amount you owe… so if you change it in 2015 say then it will be a 10 year plan to pay it off by 2025. )

I just highly doubt that IBR is the only payment plan option you two could afford that would require you to have to lose the tax benefit and file seperately.

You could also consider changing your payment plan if need be to get your total payment amount down. But I do think that you’ll need to make some lifestyle choices to get the debt down. Put as much as you can extra to the lowest loan so you have the extra money each month to put toward the other ones.

 

Post # 15
Member
405 posts
Helper bee

@abbie017:  I would say file seperately!  I did that when I was married, since I have an IBR.  No way can I afford my monthly payments otherwise!

Leave a comment


Sent weekly. You may unsubscribe at any time.

Find Amazing Vendors