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“Married, Filing Separately”: Impact on Student Loan Payments and Your Taxes

Editor's note: President Biden's SAVE Plan allows borrowers who file taxes as “married filing separately” to exclude their spouse's income from their payment. You can use our Married Filing Separate downloadable spreadsheet to model your potential added taxes and provide detailed examples below on how to select your tax filing status in light of this new plan. We also have a web based version farther down this post.

For married student loan borrowers, your tax filing status — “married filing jointly” versus “married filing separately” — affects how much you pay in taxes. It also impacts how much you pay on your monthly student loan payment, especially if you're using the SAVE, PAYE, or IBR payment plans.

However, the decision to file separately or jointly can also impact your eligibility for various tax credits and benefits. For example, it might affect your access to the dependent childcare credit and healthcare premium subsidies on the Health Insurance Marketplace.

Borrowers need to decide if the savings of filing separate for student loans is larger than the extra tax costs of filing separate.

Below, we discuss when it makes sense to choose a filing status of “married filing separately” with student loans and when it doesn’t. If you still feel confused, you can get an expert plan.

More Borrowers Than Ever Are Choosing Married Filing Separate

The vast majority of American households file a joint tax return. However, more student loan borrowers are filing their taxes separately as they factor potential student loan savings into the equation.

Note that we expect your 2023 income tax filing status to be relevant for the first time in years. Most borrowers will be recertifying income between October 2024 and September 2025.

That means if you file an extension, tax year 2023 could still be highly relevant.

You Can Amend from Separate to Joint if Necessary

You can't amend from joint to separate, but you can amend from separate to joint. That means many borrowers are leaving thousands on the table and don't even realize it.

If it turns out that 2023 taxes are irrelevant for IDR payments because the IDR recertification extension gets pushed out even more, you can simply amend your taxes to joint using form 1040X later on.

President Biden's New IDR plan, Saving on A Valuable Education (SAVE), allows borrowers to file separately.

Even individuals with modest debt amounts who previously filed jointly may need to reconsider their filing status given that you can amend it if it turns out you made an unnecessary mistake in choosing separate.

How filing taxes separately saves money on loan payments

First, let’s look at how student loans and married filing separately are correlated.

When a federal student loan borrower is on an income-driven repayment plan (IDR) with the U.S. Department of Education, the payments depend on discretionary income (private student loans are ineligible). The higher the income, the higher the student loan payments. The lower the income, the lower the payments.

The income used for the student loan payment calculation is generally taken from the borrower’s latest tax return. If the borrower is married to someone who earns an income and they file their taxes jointly, the loan servicer uses their household combined income to calculate the payment.

Previously, two student loan repayment plans have allowed borrowers to file their taxes separately. This includes Pay As You Earn (PAYE) and Income-Based Repayment (IBR).

But now the SAVE plan, formerly known as Revised Pay As You Earn (REPAYE), is also on this list.

With these payment plans, the income-driven payment is based only on the borrower’s earnings and not their spouse’s income. Now, you might be thinking, “Why wouldn’t they just file separately to keep their payments low?”

Well, the student loan payment is only one component. The amount of taxes paid for the household, as a whole, is affected by the way a couple files taxes, too.

Calculate Your Extra Tax Costs with Married Filing Separate

The biggest impact of married filing separate is that it tends to place the higher earning spouse into a higher tax bracket.

However, other relatively uncommon scenarios can skyrocket your tax bill if they happen to apply to you.

Situations that often result in a very high married filing separate penalty include:

  • Additional Medicare tax
  • Adoption expenses
  • Dependent care credits for young children in daycare
  • Higher Medicare Premiums
  • Loss of ACA health insurance subsidies
  • Loss of certain business tax deductions
  • Loss of higher education credits for adult children in college

Use the married filing separate tax calculator below:

Your Income Last Year

Your Spouse’s Income Last Year

Number of children under age 13

How much do you spend on daycare annually?

Dependent Care FSA Contribution Usually $0 to $5,000. List what you’d normally contribute if you weren’t filing separately

Number of dependent children enrolled in college

Who in your family owns a small business?

How many children did you adopt this year?

Is anyone in your family currently on Medicare?

Do you receive federal health insurance subsidies? Specifically, do you purchase a subsidized health plan on the ACA marketplace

Have you contributed directly to a Roth IRA this year?

Do you live in AZ, CA, ID, LA, NM, NV, TX, WA, or WI?

Estimated Extra Annual Cost of Filing Taxes Separately That is, the additional taxes you’ll pay under the married filing separate status compared with filing your taxes as married filing joint. Note that this estimate does not include the potential cost savings of a lower IDR payment when filing separate.

Components of married filling separate cost (show)

(Remember, this is just an estimate and shouldn’t be relied on as your true taxes. Consult a tax professional to get the numbers for your exact situation.)

If you so choose, you can download a more complete spreadsheet version of the calculator by visiting the button below to model more complex scenarios.

Get Started With Our New IDR Calculator

Tax differences between filing separately versus jointly

Couples typically owe more in taxes as a household when they file separately. This is primarily because each spouse’s income hits the tax brackets as individual filers.

Plus, some tax deductions and credits go away or are harder to get when filing separately, especially for couples with kids. Let’s take a look at the difference in estimated taxes paid in two different scenarios.

Note these are general scenarios with rough estimates. You’ll need to consult a tax professional to address your specific financial situation.

Scenario 1: Spousal incomes are vastly different

Let’s say a dentist is married to a social worker. The dentist earns $300,000, and the social worker earns $50,000. They have a joint adjusted gross income (AGI) of $350,000.

Let's illustrate their tax hit using 2022 federal tax brackets. If this couple files joint, they'd pay around $65,455 in federal income taxes. However, if they each file a separate federal income tax return, the dentist will owe about $74,220 on their tax return. The social worker will owe about $4,240. Together, this totals $78,460.

Filing separately could cost them over $13,000 in federal taxes as a household versus married, filing jointly. In this case, there are tax benefits for using joint income.

Scenario 2: Spouses have the same income

Let’s say a pharmacist and a nurse practitioner are married and making $110,000 each.

They could pay about $34,255 as a household if they file their taxes jointly. They’d each owe roughly $17,127 if they filed separately. So, their federal tax liability or tax bill would be the same as a household, no matter how they file their taxes.

Related: Student Loans and Taxes: Everything You Need to Know

Other important side effects of filing taxes separately

Tax brackets aren’t the only part of the equation when determining whether a couple should file separately or jointly.

Couples can lose out on some other tax deductions and credits. They can also miss out on subsidy opportunities with the Health Insurance Marketplace by filing separately.

Married filing separately disqualifies you from receiving a premium tax credit for healthcare

Subsidized healthcare coverage is available to people with incomes below certain levels via the Health Insurance Marketplace.

For example, your household income must be between 100% and 400% of the federal poverty level (FPL) to qualify for a premium tax credit, which lowers your insurance costs.

The state you live in and your household size also affect premiums and eligibility for subsidized programs, such as Medicaid or the Children’s Health Insurance Program (CHIP).

According to Healthcare.gov, married couples who file separately can enroll in a Marketplace healthcare plan together. But by filing taxes separately, you’ll forfeit eligibility for a premium tax credit or other savings that would reduce your monthly insurance payment.

Note that there are exceptions if you plan to file as head of household and meet other criteria (e.g., living separately) or if you’re a victim of domestic abuse, domestic violence or spousal abandonment.

This penalty for filing separately should be seriously considered for low- and moderate-income households who would otherwise qualify for health insurance subsidies.

According to data from the Centers for Medicare and Medicaid Services, 91% of Marketplace enrollees received advance premium tax credit (APTC) payments in February 2023. The average monthly APTC was $604.78, but this number varied widely by state. That’s an average annual benefit of roughly over $7,200.

Considering the cost of healthcare in the U.S., you might miss out on significant savings that might benefit your family in more ways than one.

Tax deductions and credits affected by married filing separately

The most relevant credit is the child dependent care tax credit (CDCTC) — which is not the same as the child tax credit (CTC). Additionally, the student loan interest deduction goes away.

Those two items might add up to an extra $2,000 to $3,000 in taxes a couple could pay if they file separately.

Filing taxes separately also drastically reduces the ability to deduct a Traditional IRA contribution, as well as eligibility for Roth IRA contributions. So, the lower income-driven student loan payments might be offset by the higher taxes and subtraction of other benefits.

Tax laws change, so consult the IRS website or a tax professional to learn about the differences in taxes filing separately versus filing jointly.

Which filing status will save you the most money paying back student loans?

Filing separately if both spouses have federal student loan debt eligible for IDR usually doesn’t make much sense for married borrowers.

This is typically a decision for married couples where only one has student loans.

The equation we use is a holistic one based on what’s best for the household, not one spouse. We need to look at the entire household taxes and student loan payments to see which method would be better.

Generally speaking, we know student loan payments will be lower if couples file separately, but they’ll most likely pay more taxes as a household.

Here’s the equation:

Student loan payment savings married filing separately (MFS) – increase in taxes by MFS

If the result is a positive number, then married filing separately will give the most household savings net of taxes. If it’s negative, then filing jointly will save the household the most money.

Keep in mind that there’s an extra layer of decision-making for households who qualify for subsidized coverage with the Health Insurance Marketplace. The key here is to take a holistic approach to evaluate what will benefit your household the most.

Importantly, new rules for IDR payments may change this analysis. With the discretionary income definition changing to income above 225% of the poverty line, families with children might find filing separately saves them hundreds of dollars per month in student loan payments.

Related: Is a student loan consult right for you?

The best IDR plans to keep payments low when filing separately

Both New IBR and PAYE allow the person with student loans to file taxes separately. This way, loan payments are dependent on their income alone.

IBR and PAYE are also both capped at the 10-year standard payment. This means that when the monthly payments are calculated based on income, the payment will never exceed the fixed payment that would pay off the loan in full in 10 years — kind of like a 10-year mortgage payment.

Each plan also has a “tax bomb” at the end (although this has been suspended until December 31, 2025). This means that while the remaining loan balance is forgiven, the federal government will issue a 1099 tax form with the forgiven amount. The forgiven balance will be added as income on that year’s tax return, and the borrower could then owe a large amount of taxes on the forgiven balance. It's definitely something taxpayers should be mindful of.

IBR and PAYE plans are 20-year programs with payments based on 10% of discretionary income for “new borrowers” on or after July 1, 2014.

If someone borrowed their first student loan before October 1, 2007, they generally aren’t eligible for PAYE. If they still want to file taxes separately, SAVE is their best option.

The SAVE Plan and Married Filing Separate Are a Powerful Combo to Keep Payments Low for Many

Here's a quick note about SAVE: This plan used to be called REPAYE, which previously included the spouse’s income regardless of how a couple files their taxes. However, this is no longer true under the new SAVE plan rules.

New REPAYE / SAVE will allow you to file separately with a deduction of 225% of the poverty line as of July 2024. If you're married, filing separately, you deduct one from your family size. This is handled automatically for you if you recertify your IDR payment.

Due to this change, many borrowers need to examine their tax filing status both next year and long-term.

Borrowers eligible for PAYE: Will filing taxes separately or jointly save you the most money?

Here are two examples where one spouse is the breadwinner and owes the student loan debt and another where the breadwinner isn’t the spouse with the student loan debt.

When filing jointly could make sense

Jamie and Adam got married this year. Jamie is a psychologist with $250,000 in student loan debt with a 6.5% interest rate. She has her own practice, making $125,000, and has been on PAYE for five years. Adam is a teacher making $40,000 with no student loan debt. Both anticipate their incomes growing at 3%.

student loan planner calculations

*Assumptions: Tax bomb savings growth rate is 5% per year. Tax rate at time of loan forgiveness is 40%.

The numbers here would show that there is an estimated $43,000 in savings on the student loans as a whole if Jamie and Adam filed their taxes separately for the next 15 years while Jamie finishes out PAYE. That’s about $2,866 per year on average in student loan payment savings.

If we just look at the payments this year plus the tax bomb savings, filing separately will cost Jamie $1,338 per month ($813 student loan payment + $525 tax bomb savings). However, filing jointly will cost $1,552 ($1,146 + $406). That’s only a $2,568 annual benefit to file their taxes separately. 

They ran their taxes both ways, and it’s projected to cost them $3,000 more in taxes to file separately.

Using the equation:

($2,568 student loan payment savings MFS) – ($3,000 more in taxes MFS) = -$432.

Jamie and Adam should file their taxes jointly to save the most money this year. They can make a fresh decision each year on their tax filing status. But the numbers look like filing jointly will save them the most money net of taxes.

When filing separately could make sense

Now let’s switch it. Let’s say Amber is a chiropractor with $250,000 in student loan debt and is making $40,000 working part-time. She’s been on PAYE for five years as well. Her husband, George, works in IT, making $125,000.

*Assumptions: Tax bomb savings growth rate is 5% per year. Tax rate at time of loan forgiveness is 40%.

Notice that PAYE filing jointly is the exact same as with Jamie and Adam. But the filing separately scenario is completely different, since the breadwinner isn’t the one with the student loans.

Now we’re looking at a difference of over $135,000 savings to pay back the student loans if they were to file separately. That works out to be about $9,000 per year over 15 years. Just like Jamie and Adam, Amber and George would pay $3,000 more in taxes by filing separately.

($9,000 student loan payment savings MFS) – ($3,000 more in taxes MFS) = $6,000

Amber and George should file their taxes separately to save the most money net of taxes as a household.

As income changes from year to year, so can the result of this equation. The good news is that they can compare the taxes to student loan payments and decide how to file their taxes each year if they’re on PAYE. They can and should make a fresh tax filing status decision each year.

In conclusion, there appears to be a greater benefit to filing separately if the spouse with student loans makes less money. The couple has the same tax penalty, regardless of who has the loans, but the cost to pay back the loans goes way down.

When to Use SAVE vs. New IBR / PAYE

If someone isn’t eligible for PAYE because they took out loans prior to October 1, 2007, your best option will be the SAVE plan. The only question is whether you should file joint or separate.

SAVE is almost always the better option for undergraduate loan borrowers, as it comes with a 20-year term, regardless of when you took out your loans. The only reason to not use SAVE would be the lack of a payment cap. And that's only relevant in rare cases, usually involving PSLF.

But graduate borrowers have to wait 25 years to earn student loan forgiveness on SAVE. If you took out loans before 2007, you don't have any other repayment options, so SAVE is the best plan.

However, if you took out your first loans after October 2007, you can choose between PAYE and SAVE. If you took out your first loans after July 2014, you also have the option to use New IBR.

For graduate borrowers, PAYE and New IBR usually work out to about $100 to $200 a month more than the SAVE plan.

Considering that you could shave five years off your forgiveness date with those plans, paying a small amount extra could make a lot of sense if you have exponentially increasing income.

When is SAVE the Better Choice for Graduate Borrowers

If you are planning to pay back your student loans, SAVE is always the best choice until your required payments are high enough that they cover your interest.

The reason? You receive an interest subsidy of 100% of the interest that your required SAVE payment doesn't cover.

Most borrowers could receive a large interest subsidy in the first two years after graduation at a minimum due to low taxable income for the first years after graduation.

Also, if a graduate-degree-holding borrower will never come close to the Standard Repayment 10-year payment cap and plans to use PSLF, she would be better off on the SAVE plan.

Other ideas to save money paying back your student loans when filing separately

A married couple will not pay as much taxes when filing separately if their income is fairly close. The wider the income gap, the more the household will generally owe in taxes if they file separately.

If the person with student loans has a higher income, then any and all deductions to Adjusted Gross Income (AGI) could change their side of the income equation.

For example, let’s say Doug earns $100,000 and owes $200,000 in debt, while Julie earns $70,000 and has no student loans. They are both contributing 6% of their income to get their maximum employer matching contribution to their retirement plan. They still have another $1,000 per month that they could put into retirement. Doug is on PAYE, and they’re filing their taxes separately.

Rather than splitting up the $1,000 evenly, Doug could put the $12,000 per year into his retirement only. That would reduce his AGI from $100,000 to $88,000. Julie’s would stay at $70,000.

Now, Doug can also put $7,000 into his HSA, which lowers his AGI to $81,000. By reducing Doug’s AGI by $19,000, their individual incomes are only $11,000 apart rather than $30,000. So, the extra taxes from filing separately should go down.

Doug would also benefit from lower student loan payments the following year. Remember that PAYE is based on 10% of discretionary income. So, lowering Doug’s income by $19,000 will reduce his student loan payment by $1,900 for the year. It’s a win-win…win! Less taxes, lower student loan payments and awesome additional nest egg savings!

“Married, filing separately” with student loans in a community property state

Someone with student loans who lives in a community property state might also be able to save even more money paying back student loans if they file taxes separately.

Nine states are community property states and have different laws around whose income is whose. These are Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin.

The gist of it is any salary, wages or other pay received for services performed by either or both spouses while married basically belongs to both spouses equally. There are other nuances that I’ll spare you, but feel free to read this from the IRS website.

The benefit to couples living in a community property state is that this community income is equally distributed between the spouses if they file separately.

In other words, if a doctor made $300,000 in income and her psychologist spouse made $100,000, they would each claim $200,000 on their income if they were to file separately, rather than their individually earned income, if it’s considered community income.

This typically means that a couple would pay less taxes by filing separately than they otherwise might in a common law state.

Where this is really attractive is if that doctor I mentioned had student loans and was going for Public Service Loan Forgiveness (PSLF). But their PsyD spouse didn’t have loans. This “breadwinner loophole” would lower the doctor’s income dramatically. And that would significantly lower their overall cost while pursuing the PSLF program.

If you’re interested to learn more, check out Student Loan Planner® Podcast Episode 6, where we talk about the “breadwinner loophole” in detail.

Should you file taxes separately if you both have student loans?

This is a fairly common question because it’s hard to find the right answer on how this works.

When both spouses have student loan debt and are on an IDR plan, filing taxes separately gives very little reduction in student loans. It usually ends up costing the couple more in taxes than it saves them in loan repayment.

Let’s say that both are on PAYE and that they file their taxes jointly. One spouse makes $150,000, and the other makes $50,000 — 75% of household income and 25% of household income.

The loan servicer will calculate the household payment based on the household income of $200,000. Of that monthly payment amount, 75% will go to the loans of the $150,000 earner. The other 25% will go to the loans of the $50,000 earner.

If this couple were to file taxes separately and certify their income using their individual tax returns, they might have significantly lower payments due to an extra deduction to their discretionary income.

Filing Separate When You Both Have Student Loans on the SAVE Plan

Borrowers may find that under the SAVE plan, you could save more on your loan payments than filing separate costs.

This is because the deduction for the SAVE plan is 225% of the poverty line based on your family size.

If you file taxes separately, you get to use your family size minus 1. But if you have children, only one spouse gets to claim them for family size purposes.

So, say each spouse in a family of four earns $50,000 a year. 225% of the poverty line for a family of four is $70,200.

However, 225% of the poverty line for a family size of 4-1 (i.e., 3) is $58,095.

225% of the poverty line for a family size of 1 is $33,885.

Filing separate would allow one borrower to use family size 3 and one borrower to use family size 1. They can earn a total of $91,980 before paying anything.

10% of the difference in deductions is about $2,000. So if filing separate costs less than $2,000, you should file separate even if you both have loans.

You can see how powerful filing separate could be under the new SAVE rules, even for borrowers who are both making payments. This math is significantly different than the old rules.

How to save the most money paying back student loans

There’s a ton of money at stake when we’re talking about paying back five or six-figure student loan debt. It makes sense for an expert to review your specific situation while taking family size, career path, household income, repayment amount, forgiveness programs and financial goals into consideration. This is especially true now, considering the SAVE rules could change how most borrowers pay their student loans.

This holistic approach will ensure that you’re saving the most money but also weighing additional factors, like qualifying for Health Insurance Marketplace savings.

Our team has helped thousands of clients create winning repayment and refinancing strategies to take on their student debt. We’d love to help you finally feel confident about how you’re handling your student loans and save as much money as possible.

After a consultation with us, you’ll understand the path that will save you the most money when paying back your loans. You’ll also gain the clarity you need to feel in control.

Not sure what to do with your student loans?

Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).

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  1. Lauren February 28, 2019 at 3:25 PM
    • Travis Hornsby February 28, 2019 at 3:30 PM

      Good question Lauren. There is no tax bomb for PSLF. For IDR forgiveness over 20 to 25 years in the private sector, you have to pay taxes on the forgiven amount.

  2. Amanda Voelker April 30, 2019 at 11:16 AM

    Hi-your blog post about doing a MFS tax return has helped me tremendously! Thank you for that. I recently did MFS for my 2018 return. I would like to do a change in calculation for my payment, as I do not recertify until the fall. I am trying to fill out the form but feel as though I have come into a problem that I thought maybe you could help me with.

    A little info on my situation. I am on PSLF and on the PAYE program. My 2018 MFS return has been processed. My husband is a new business partner, so he has received an extension and will not file until the fall. When filling out the form for the ‘recalculate my payment’, it instructs me to section 6 where it instructs me to send in my tax return and my spouses. Problem is my husband hasn’t filed yet. Last year we did a joint return, so technically I don’t want to send that in. I need to somehow get to section 5, where it would allow me to send in a current pay stub for him, but I can’t get there with my answer selections. So I am not sure where to go from here. I know since I am on PAYE they can’t use his income in the calculation. However, I just need help in figuring out if they will allow the current pay stub for him eventhough section 6 says to send in his tax return.
    Do you have any suggestions?
    Also–another blogger highly suggests sending in the form via certified mail. The reason is so that I can avoid using the automatic IRS tax tool when completing the application. Would you agree with this recommendation?

    Thank you for your time,

    • Travis Hornsby April 30, 2019 at 1:29 PM

      I’d agree about the letter vs the automated tool. You’ll have a rough time recertifying w alternative documentation since you have a most recently available tax return that says joint. I’d suggest filing the new tax document to prove you actually filed separately, otherwise even if you submit paystubs it’s still going to have to go off the most recently filed return, which does not say separate. Hence, unless there’s some compelling reason to delay filing, I’d get filed as soon as possible.

  3. Amanda Voelker May 1, 2019 at 8:37 AM

    ok–just for clarification. I did file single for 2018. My husband will also file single for 2018, but not until the fall (this is the way branch partners in this company go about it, because the owner of the company doesn’t release the K2’s to the partners until later) . So I don’t have the 2018 tax return for my husband.
    What I want to do right now is have them recalculate my payment based off of my tax return–filed as single. Could I do this and also just send in my husband’s current pay stub with a note stating that he has not filed single yet for 2018? They technically shouldn’t use his income docs anyways, since I am on PAYE, correct?

    thank you again!

    • Travis Hornsby May 1, 2019 at 10:30 AM

      By single i assume you mean “Married filing separate” since single is not an option. If you filed your return as married filing separate in 2018 then it shouldnt matter what he did. Sounds like you dont have a choice but to try with his paystubs and see what they say. The only guaranteed way to get his payment excluded on PAYE is through submitting a complete return.

      • Amanda Voelker May 7, 2019 at 9:57 AM

        ok–thanks for your help.
        I think I will at least try with my MFS 2018 return and then his current paystub. Maybe I can get something from our tax guy that shows he is on an extension for his MFS 2018 return.
        If they don’t approve it, then we will just have to remain paying what we pay until his return is complete and it will then be soon to officially recertify anyways.
        I appreciate your time devoted to my questions.

  4. Sam October 1, 2019 at 12:10 AM

    This is a very helpful post. However one thing concerns me.
    Here’s the situation
    Husband loan 65000 (working toward pslf)
    Spouse loan 0
    Filed our taxes jointly for 2018 but we want to file separately for 2019
    When he talked to the fedloan servicing, they said, we cant put MFS since we have to go off of the current return & sent us a bill of 700$ a month which we cant afford so they put his account on hold for 60 days.
    Now if we start PAYE with MFJ, can we still change it next year to MFS (after we file our taxes separately) & the monthly payment will be affordable?

    • Travis Hornsby October 8, 2019 at 4:42 PM

      You can change PAYE MFJ to MFS by just your tax return. Don’t trust what they tell you its wrong as often as its right

    • Dan March 11, 2020 at 11:52 PM

      Hi Travis,
      My wife and I are both on PAYE and have about equal loan balances. We plan to file jointly, however we don’t want to each be paying 10% of our combined AGI towards our individual loans. That would be like paying double what we should. I brought that up with Navient and they said to just submit our own paystub for income verification and select “cannot reasonably access spouse’s income information.” What are your thoughts on that? Married filing jointly means we did have access to spouse’s income info…

      • Travis Hornsby March 13, 2020 at 8:36 PM

        Right but they dont double count your income like that. It’s a proportional payment of the total PAYE amount. So filing joint is fine you dont need to check that

  5. Dan October 7, 2019 at 1:31 PM

    Is it smarter to be on PAYE and pay off a tax bomb in 20years? If I have an Inheritance to pay off my loans now? Seems like a tax bomb will be so huge when my loans are done 7.5% interest

    • Travis Hornsby October 8, 2019 at 4:36 PM

      That’s bc ppl dont understand the difference bw simple and compound interest w student loans. I would probably not pay it off if you owe a lot.

  6. Dan November 18, 2019 at 5:42 PM

    Hey Travis,
    Thanks for that information! It’s been really helpful.
    I have a quick question when refinancing the loan when you do file “married but seperately”.
    When re-certifying on FSA site, it doesn’t have the “when you filed your last federal income tax return, did you file jointly with your spouse?” questions when you link the previous years tax return using IRS.
    When I answer the “Are you separated from your spouse?” with “NO” and “Are you able to access information about your spouse’s income and able to have your spouse sign this application?” with yes, it’s telling me that she has to still co-sign and provide her income.
    Do i still have to go through that and provide everything, even though I’ve filed it separately and should only have my portion be accounted for in determining the monthly payments?
    Thank you

    • Travis at Student Loan Planner November 20, 2019 at 10:06 AM

      Yes you should but if youre on PAYE / IBR then it shouldnt take into account their income even if they have to provide it. Also note you need to submit tax return and not paystubs.

  7. John January 2, 2020 at 11:53 AM

    I am a tax professional with a client utilizing this program. They file separately as he is a high earner (over 200k) and she is moderate (50k) with the student loans. The IRS allows taxpayers who previously filed separate tax returns to amend to a joint return within three years of the original filing. Would amending their 2016 separate tax returns to joint jeopardize her lowered monthly payments or her loan forgiveness at the end of the 10 years? In other words, do they only look at the most recently filed tax return, or will they look back at changes made to the originally filed tax return at any point?

    • Travis at Student Loan Planner January 6, 2020 at 2:58 PM

      I can’t guarantee they wont but we think it’s legitimate to amend tax returns at least 2 years old.

  8. Paula January 9, 2020 at 10:00 AM

    In your article you discuss about switching repayment plans. I am part of the REPAYE plan for PSLF and have been in my repayment term for 3 years, am I able to switch to the PAYE or IBR without penalty to my repayment term or does the PSLF repayment term start all over when I switch to another repayment plan? Also your article states that married filing separately is not taken into consideration with REPAYE, can you explain this more?

    • Travis at Student Loan Planner January 14, 2020 at 12:38 AM

      Meaning your REPAYE payment is the same regardless of your choice of filing status, while PAYE and IBR you can have a lower payment sometimes. Yes you can switch without starting over, but I’d only switch if it was to PAYE

  9. Jodi January 27, 2020 at 10:02 AM

    I am in a community property state. On so half my husbands income gets reported on my taxes. My payment is on the paye an loan forgiveness program. My paystubs were used too determine my loan. My husband makes twice as much as me and now my income shows 30000 more than I make. Is my payment at recertifications going to go off of that now even though paye isn’t supposed to use my husbands income to figure my payment?

    • Travis at Student Loan Planner January 27, 2020 at 2:31 PM

      If you’re using alternative documentation of income then it shouldnt count your husbands income.

  10. Becky February 5, 2020 at 12:26 PM

    Thank you so much for this! This is very helpful! I am in a community property state and I am currently under the REpaye program and file separately. My husband makes 200k with no fed loans and I make 70k with 150k fed loans. I am not eligible for PAYE. I am considering moving to IBR and still filing separately seeing that my husband will likely make more and more money over time (he is a lawyer). I understand that my loans will capitalize (by 3,600) but it seems like the right move over time. While the loan payments are steep ($450), I can afford to pay those on my own. I have about 6 more years on my PSLF program. Generally speaking, is this sound logic?

    • Travis at Student Loan Planner February 5, 2020 at 1:48 PM

      Yes you should probably switch to IBR filing separately. However please note that you will need to use alternative documentation of income to show your income or else your payment will be higher than necessary.

  11. James February 8, 2020 at 11:10 PM

    Thank you so much for all of this very helpful information. It is truly appreciated.

    My wife and I are both individually on the PSLF forgiveness path and about 5 years in, so halfway to freedom. We were married recently in 2018.

    Me: 240k salary, qualify for PAYE, with 223k in loans at 6.95% average interest

    She: 85k salary, qualifies for REPAYE but not PAYE, with 163k in loans at 6.76% average interest

    Given that we both have loans and that both of our incomes will be considered given her REPAYE, it seems like we should file taxes jointly to minimize our net monthly loan payment considering the better tax return with joint filing. Does that sound right?

    Or should we consider having her do IBR (maintaining my PAYE) and filing separately? Thanks again.

    • Travis at Student Loan Planner February 10, 2020 at 9:32 AM

      Probably need to do PAYE and REPAYE and file jointly. Payment gets split proportionately based on your debt size

  12. Kate February 20, 2020 at 6:45 AM

    As I’m reading through this very valuable article, I see that you don’t talk about married filing separately and using the income contingent repayment plan. I have loans both in Income based as well as income contingent. Filed first time last year and they didn’t consider spouses income. This year when I sent in my application to recertify, they are asking for spouse’s tax return (again, we filed separately) and wanting him to sign off on my application. We did not do this last year. I went to school, I took responsibility for the loans I took out, he had nothing to do with it. Why are they asking for this? What are my options?

    • Travis at Student Loan Planner February 20, 2020 at 10:38 AM

      If you file separately you still want to give them the tax return so you can be in compliance but they aren’t supposed to use his income.

  13. jodi gaut February 20, 2020 at 10:53 AM

    Nelnet told me to just use my paystubs for my income verification since the tax return in a community property state does not reflect the individuals income properly

    • Travis at Student Loan Planner February 20, 2020 at 11:06 AM

      That’s called alternative documentation of income and you can certainly do that but you can also use tax returns.

  14. Brendan February 22, 2020 at 12:35 PM

    Hi Travis! Great article, thanks so much.
    I have a specific situation and have found it difficult to find advice, so I was really hoping you can help.

    My wife and I got married in September 2018, and we filed our taxes JOINTLY in March 2019. She has $70,000 left in student loans that she has been paying down on the PAYE system, as she is a nurse working for a non-profit that qualifies for the Public Service Loan Forgiveness program (PSLF). Previously, she was making $305 monthly payments under this system. However, she had to re-apply this year and included our jointly filed taxes that have our combined household income (I have no loans) and it brought our monthly payments up to $800.

    Can she re-apply to this and not include my income? We are ready to file our taxes for last year’s income, so can we file those as Married (filing separate), and then re-submit this PAYE application so it only accounts for her income and not mine? If that is the case, do we have to wait for those tax returns to come back? We cannot sustain paying $800/month, but still want to qualify for PSLF.

    Your guidance here would be much appreciated!!!

    • Travis at Student Loan Planner February 23, 2020 at 5:36 PM

      Yes you should submit your tax return and then reapply although theyll still ask for your income they just wont include it

  15. Edward March 2, 2020 at 1:43 AM

    Hi Travis, just need some clarity here. So my wife and I live in Arizona, community property state. We both have student loans under IBR and make 100k income each. Is it best to file jointly than separately? The government wouldn’t double our monthly repayment amount since discretionary income would be 200k MFJ instead of 100k MFS? Thank you.

    • Travis Hornsby March 5, 2020 at 10:38 PM

      It wouldn’t matter a ton either way. I would probably file jointly but if you’re on IBR filling jointly you should likely be on REPAYE since that’s 10% of your income instead of 15% and both plans qualify for PSLF

  16. Zach March 10, 2020 at 11:42 AM

    Question about the “discretionary income” computation: my wife and I live in a community property state and have 2 kids. We both have loans under IBR (we don’t qualify for PAYE). To determine whether we should file separately, we want to figure out what our respective IBR payments would be. To do that, we each need to know our “family size” for purposes of the income driven repayment plan. Since we’re in a community property state, neither of our dependent children receive “more than half of their support” from either me or my wife – they both receive exactly 50% of their support from each of us. My wife’s salary is higher than mine. Should she report her family size as 4, and should I report my family size as 2? Should we both report a family size of 4? Or should we both report a family size of 2?

    • Travis Hornsby March 13, 2020 at 8:40 PM

      You both report a family size of 4 since it’s not based on who’s claiming who. The form just asks for what the family size is.

  17. Lea March 26, 2020 at 1:58 PM

    Clarification please. We have previously filed jointly. My husband makes close to $30, 000 more than me and zero student loans. I qualified and received Teacher Loan forgiveness last year and currently going through application process for PSLF for remainder of balance. I was doing IBR first and when renewed, was switched too REPAYE. Both years I checked that I could not reasonably access my spouses income and asked to submit paystubs. Do I file separate or jointly? Reading through I see that spouses income is not considered with REPAYE…is this correct? Thanks!

    • Travis Hornsby March 27, 2020 at 5:41 PM

      Spouse’s income is considered regardless on REPAYE. You shouldn’t be checking that unless you’re separated or a victim of domestic abuse. IBR filing separate is the more legal way to exclude his income.

  18. Hannah January 21, 2021 at 6:19 PM

    Can my husband and I file jointly for 2020 taxes if he is currently still a student?
    We got married in 2020 and he is graduating in 2021 and enrolling in PAYE. Once he enrolls in PAYE, do they look at 2020 tax returns, or his monthly pay stub? How does PAYE calculate how much you have to pay monthly, and why do tax returns play a role?
    In 2020, he made $0 (student) and I made $92K. In 2021, I will make $140K and he will make $25K (residency).
    For 2021, we will file taxes separately, but does it make sense to file separately for 2020? Is that a requirement?

    • Amy at Student Loan Planner February 9, 2021 at 12:25 PM

      PAYE is calculated using your AGI from your tax return. If you file jointly, it will include both of your incomes. PAYE payments are a percentage of your AGI, and it’s hard to say if you should file separately or together without analyzing your loans. I recommend reaching out to one of our student loan experts for a custom analysis to get a repayment plan that saves you the most money.

      • Hannah Yoo February 9, 2021 at 1:26 PM

        Thank you for your response.
        My question is can we file jointly in 2020 and submit that in December 2021 when we enroll in PAYE, and then file separately for 2021 and submit that in February 2022 to change our monthly payments?
        Can we recertify our filing status mid-year?

        • Amy at Student Loan Planner February 9, 2021 at 3:11 PM

          If you income drops, you can report that to your servicer and have your monthly payments adjusted. For the other question, reach out to these guys https://studentloantaxexperts.com/ and mention SLP as the referral source for a discount if you decide to hire them.

  19. Kevin March 2, 2021 at 9:36 AM

    Thank you for the very informative article and website. You have helped me greatly throughout this process. Can you please provide input to my situation, it would really be appreciated.

    I have $460k in loans, my wife has 0. In 2020 I worked half the year in training ($50k salary) and the last 5 months of 2020 as an attending (275k salary). My wife is a resident now and the next two years ($50k salary). We also bought our first house in 2020 under her name only (long story). Does it make sense for us to file taxes married filing separately or jointly? Thank you for any advice!

    • Amy at Student Loan Planner March 2, 2021 at 6:28 PM

      That’s a great question. Deciding to file together or separately can be a key strategy to student loan repayment! We cover it in-depth during a consult, so I recommend you check that out. You can find more info here.

  20. Stephen March 3, 2021 at 9:24 AM

    Hello, I’d like to clarify a situation I’m trying to figure out. I am on the PAYE repayment plan. Because my income is a lot higher than my wife I didn’t qualify for the stimulus checks in 2020, and the possible 2021 stimulus check. So I am considering filing taxes in MFJ status in order to qualify for the 2020 (and possible 2021) payments. I have to recertify with the MFJ tax return in late 2021 and this will raise the monthly student loan repayment amount in 2022. However, I’ve been told that my wife and I can file taxes as MFS in 2022 and based on those tax returns, I can recalculate as soon as the returns are accepted by the IRS. This would cut in half the monthly loan repayments for the rest of 2022. I wanted to make sure this will work? My servicer has said it is OK, but I have received contradictory information from them in the past. Thanks,

    • Amy at Student Loan Planner April 5, 2021 at 12:46 PM

      What’s best for your situation depends on a lot of factors, but you could recertify and say your income dropped and supply your tax most recent return.

  21. Stacy March 10, 2021 at 9:44 AM

    We usually file separately for the reasons above. But I think the other variable for this year is when we’ll have to re-certify for IBR. If it won’t be this year (after payments resume), then MFJ is the better option for us and we can always go back to MFS next year. But I don’t know how to figure out when I’ll have to recertify now that all the typical timelines are out the window.

    • Amy at Student Loan Planner April 5, 2021 at 1:05 PM

      The payment freeze and changes to recertification definitely can impact your repayment strategy. In the grand scheme of things 1 year won’t make a huge difference, but it could be beneficial to see how it could change your payments and/or the amount you owe in taxes. That’s something that’s covered during a consult, and I recommend you booking an appointment to get an in depth analysis of what would be best for your situation.

    • Stephen Tippett April 8, 2021 at 1:17 PM

      I called my loan servicer and asked when the recertification process will start and finish and when to expect a new payment amount. My servicer will recertify in October – Dec and the new payments will start in January 2022.

      • Amy at Student Loan Planner April 17, 2021 at 11:41 AM

        That’s great to hear! Glad they’re issuing guidance on recertification. It can vary by lender, but now you know!

  22. MM March 10, 2021 at 7:55 PM

    Hi, I am in the last stretches of PSLF and hope to have my forgiveness granted June 2022. All of the student loan debt is mine and my wife has none. We live in CA and have been filing MFS for the last 9 years to reduce my payments while taking the increased tax hit. During tax season of next year I plan on amending our previous 3 years of returns to MFJ to hopefully recoup some of the lost tax refunds. Do you foresee any issue with this?

    • Amy at Student Loan Planner April 5, 2021 at 1:06 PM

      Amending tax returns is a strategy we recommend for many couples, though we always advise you check with a tax pro first.

  23. Kim C March 10, 2021 at 10:35 PM

    Hello! I am on the PAYE plan, and became a registered domestic partner in 2020. Since domestic partnerships are not recognized federally, my partner and I will have to file as single federally, but as married/registered domestic partners in our state. If we file jointly as registered domestic partners on our state returns, will this affect my filing status when my PAYE calculations are determined? Or do they only take your federal filing status into account?

    Thank you!

    • Amy at Student Loan Planner April 5, 2021 at 1:08 PM

      Federal filings are what IDR plans use to calculate payments, so your state return status shouldn’t matter.

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