My wife and I both qualify for IBR and PSLF. Married filing jointly puts us at $650 monthly payments while separately makes our payments about $80. So since after 10 years the remaining balance is gone it’s in our best interest to make the payments as low as possible.

Now this year filing taxes like this will cost us $1400 in taxes. This is from losing out on childcare expenses and loan interest.

So since IBR is based on the prior year. Like we just filed both our taxes and paid $330. Once we use that information for this year (2015). So next year when we file taxes we file as separate again. Once that is completed and we give that to the DOE can we refile 2014 as married jointly and get our $1028 refund? Plus the $330 we paid for the almost $1400 back?

I asked my tax advisor and she sees no issue as you can refile for 3 years. I spoke to the loan person at DOE and they didn’t know but said they “advised against it”. That’s purely because he didn’t know, I spoke to two different people and none knew if it would matter.

I don’t care about “morale” or anything like that. I want to know if what I’m describing is legal? If it is I will do it if it’s not I won’t. Does it matter? If they only use the current year can I just keep refiling each year after the New Years taxes are done?

I hope I’m being clear on the matter. Thank you for your time. If there is any information that is clear on this please give me the link.

I think people have been asking this question on this forum for years, myself included, and there is no authoritative answer as far as I know.  However, ask yourself whether there would be a right to a refund from IBR if you amended your return from joint to separate.

I wish there were an answer on “legality” of this, but with IBR and student loan repayment plans being relatively new, there simply isn’t. The law is silent. What you have to ask yourself is, in the ever changing legislative world of student loan repayment plans, “Do I foresee those in the government and policy making roles catching on to this, drafting policy against it, and negatively impacting my ability to discharge in 10/20/25 years (whenever your loans qualify for discharge)?” Having tons of student loans myself, I’ve been following the evolution of student loan programs closely, and I only have “senses” about how things may turn out. I “sense” the ridiculous tax consequence at the time of discharge will be waived. (similar to the mortgage forgiveness debt relief act) Discharged loans being treated as taxable income is a ticking time bomb, it’s been raised by the Left several times already. The issue will get louder and louder as more people reach their discharge year. Unfortunately, I am unsure if policy makers will catch on to the “File Separately- get favorable IBR payment/Amend to Joint- get favorable tax treatment” Game…but my loans are wrapped up for 25 years, and that gives them a really long time to figure it out. If I were in the 10 year plan and several years in, I would feel more comfortable doing it. If they do catch on, they may very well apply it to new loans. Lots of student loan repayment changes are not retroactive. But some are…

I have a similar issue, I am being forced to amend my separate return to a joint return as part of a complicated divorce settlement to save my irresponsible ex husband from massive tax debt for not filing any taxes while we were separated. Having his income on my tax return would probably boot me right outta IBR. It certainly would change my IBR payment that year from $0 to $1,000’s. I called all of my servicers, spoke to supervisors, and they all said at the end of 25 years (which I “sense” will turn into 20 years, I think paye terms will apply to older loans starting in 2016) they will NOT go back and look to see if amended returns were filed after-the-fact. They promised me up and down. But not in writing ;) Even if it was in writing, they are just some person who reached suprevisor status at a student loan servicer. They are not the student loan God.

So, moral of the story, the law is silent on the Married Separate-Amend to Joint Later Game. Play at your own risk.

jaax - 22 March 2015 12:15 PM

Unfortunately, I am unsure if policy makers will catch on to the “File Separately- get favorable IBR payment/Amend to Joint- get favorable tax treatment” Game…but my loans are wrapped up for 25 years, and that gives them a really long time to figure it out. If I were in the 10 year plan and several years in, I would feel more comfortable doing it. If they do catch on, they may very well apply it to new loans. Lots of student loan repayment changes are not retroactive. But some are…

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So, moral of the story, the law is silent on the Married Separate-Amend to Joint Later Game. Play at your own risk.

I must admit this thought (MFS—> Amend to MFJ w/in 3 years) has occurred to me, though I haven’t done it and probably won’t. I’m in the first PSLF class and will hit 120 qualifying payments in May 2019.

As I see it, it’s important to point out IBR does not require a married person to file MFS, though you’re often incentivized to do so (like when your spouse has similar income but no loans). Also, I doubt whether policy makers foresaw this eliminating common deductions such as the student loan interest deduction or a traditional IRA deduction, for example, and the general ease of itemizing deductions as they attempted to “lessen” the hardship of student loans for those engaged in public service.

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