Heather,
I don’t believe you have answered this exact question before. It may affect a sizable number of borrowers.

For married borrowers (filing taxes separately) with children in which both spouses have federal loans in repayment under the IBR plan, are both spouses permitted to count the same child for purposes of family size? For example, in a family of 3, may both spouses certify a family size of 3 (self, spouse, child) or, alternatively, may only one spouse certify a family size of 3 (self, spouse, child) and the other spouse must certify a family size of 2 (self, spouse)?

As you know, under the IBR plan regulation at 34 CFR 685.221(a)(3), “Family size means the number that is determined by counting the borrower, the borrower’s spouse, and the borrower’s children, including unborn children who will be born during the year the borrower certifies family size, if the children receive more than half their support from the borrower.” Phrased differently, the question is: may both married borrowers certify that their child receives more than half its support from them or may only one spouse do so?

Does anyone have an answer to the question posted above? Thanks.

I’ll take a stab….I think if you are married filing jointly, both spouses complete ONE application together, so both get the benefit of the family size deduction. No need to fill out two separate IBR applications and wonder what to enter for family size in each application.

However, in the IBR Q&A, this question probably addresses the married filing separately situation addressed above:

47. Q. I understand that I must report my family size when I first apply for an income-driven
repayment plan and then annually as long as I remain on the plan. I don’t claim my child
as a dependent on my taxes and don’t have physical custody of my child, but I
contribute significantly to my child’s support. Do I count my child when reporting my
family size?

47. A. For all income-driven repayment plans, your family size includes your children if they receive more than
half of their support from you. You may count your child when determining your family size if you provide
more than half of the child’s financial support, regardless of who claims the child for tax purposes or who
has physical custody. If you don’t provide more than half of your child’s support, you may not include the
child in your family size for income-driven repayment plan purposes.

Basically, if you file your taxes married filing separately, only one of you can claim a child as a dependent on your taxes, not both. Therefore, if you didn’t claim the child as a dependent on your taxes, or if you cannot justify that you provide more than half of the child’s support, you cannot include it as a dependent in calculating your family size on your IBR application. The statement “You may count your child when determining your family size if you provide more than half of the child’s financial support, regardless of who claims the child for tax purposes or who has physical custody” sounds open to interpretation, but it is probably similar to situations where both parents claim a child as a dependent because they think they both provide more than half of the support, and the IRS steps in during an audit to determine who REALLY is allowed to claim the child as a dependent. If you are going to put your entire family in the family size box and your spouse does the same, be prepared to prove it. That’s my interpretation, so if someone hear’s different, I’d be interested to know.

However, I might add that both spouses can include their spouse, as indicated in the law quoted above. So, if married filing separately and one spouse doesn’t support the children, that spouse can claim 2 as a family size, and the other can claim 2 plus any children whom they support more than 50%. The law, I admit, is pretty vague, so I question how much it is enforced, but you should have all your ducks in a row in case you are ever questioned….(also, the fact they let you include an unborn child….kind of hard to say you provide more than half the support if you are not the mother, eh?)

hart47 - 09 January 2017 12:12 PM

However, I might add that both spouses can include their spouse, as indicated in the law quoted above. So, if married filing separately and one spouse doesn’t support the children, that spouse can claim 2 as a family size, and the other can claim 2 plus any children whom they support more than 50%. The law, I admit, is pretty vague, so I question how much it is enforced, but you should have all your ducks in a row in case you are ever questioned….(also, the fact they let you include an unborn child….kind of hard to say you provide more than half the support if you are not the mother, eh?)

So is the “support” based solely on incomes? My wife makes more than me(we are Married filing sep), but who decides who pays more in support?

I believe support is based on who is actually paying for child expenses, as opposed to who has more income generally.