Does anyone know how starting a sole proprietorship will impact payments under an IBR?  I have a job but the pay is so low I can’t make it on this! So I decided to take a little each month and start a sole proprietorship.  I know IBR payments are recalculated each year based on the AGI. Does anyone have any thoughts on how Direct Loans will view the “business loss” on my 1040 when I’m suppose to be “low income?”

Love this forum. Thanks to you all for sharing your questions and responses.

It’s all about AGI.  DL isn’t gonna care that you have a business, they just want to know your AGI and family size.

Thank you, Heather! This is great news. I’ll move ahead with my plans.

This is such a great forum!  So, I have a related question.

My partner was laid off in 2011, so our tax returns for 2011 will not accurately reflect our current income level.  I know when you apply for IBR, you can supply alternative statements of income (i.e. current pay stubs, etc).

I have a salaried job, so I can provide pay stubs.  My partner started a private practice that is a sole proprietorship.  Since you report Net Profit / Loss (and not Gross) for your AGI, how do you report Sole Proprietorship income you intend to make in 2012 when you supply the required paperwork?

On a related note, my child’s health care is taken out pre-tax, so I assume I should report my gross salary minus the cost of dependent health care, correct?