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IBR, Community Property State and Providing AGI. Help!

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Joined 2017-05-24

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Hello all! I’ve searched everywhere online and can’t seem to find the answer so hopefully someone can provide some insight. My wife is on IBR and we file separately in a community property state in order to minimize her payments. I realize that there are three ways in providing verification of income to the loan servicer to calculate payments, these are:

1) Import last years tax return information directly via the IDR application on the studentloans.gov website.
For us people who file separately and living in a community property state, the AGI listed will not be accurate as it is shows both our incomes divided by two.
2) Provide a recent paystub to the loan servicer.
This is good and all but this is not AGI and the loan servicer will calculate as gross income which payments will be higher.
3) Provide an income verification letter to the loan servicer.
Again, this not AGI and the loan servicer will calculate as gross income.

In a non-community property state number one would provide the lowest payments, as it will provide the AGI and not your gross income which can be significantly higher. For us in a community property state how do we show the loan servicer our AGI? Before anyone suggests the “Alternative Income Documentation” form, my understanding is that the form will still only account for gross income.

My goal is keep payments as low as possible since my wife will be doing PSLF. There’s some payment savings to be had providing AGI versus gross but how can I show this to the loan servicer? The only thing I can think of is a document by a CPA showing what her calculated AGI is.

I’ve been back and forth with My Great Lakes and they’re clueless. Please help!

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Total Posts: 154

Joined 2015-01-08

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The only info I found on this topic is

http://askheatherjarvis.com/forums/viewthread/9149/#2172

and discussion of AGI vs Gross in the comments here:

http://www.jdunderground.com/loans/thread.php?threadId=80738

It looks like in a community property state, your AGI and your spouse’s is 50% of your combined AGI. So, if she makes less than you, her AGI will look higher and payments will be higher. If she makes more than you, she’ll benefit by showing a lower AGI. If Great Lakes uses the same logic as Fedloan Servicing, you cannot show AGI with alternative documentation of income. You *might* be able to supply written documentation explaining your income instead of paystubs, and just list the amount you consider AGI, but I do not know how much they investigate and ask for further documentation.

From alternative documentation letter:
“You must provide supporting documentation for all income reported in this section (for example, pay stubs, letters from your employer containing your income, interest or bank statements, dividend statements, canceled checks, or, when these forms of documentation are unavailable, A SIGNED STATEMENT EXPLAINING YOUR INCOME SOURCE(S) and giving the addresses of these sources). All supporting documentation must be no more than 90 days old.”

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Joined 2017-05-24

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Thanks hart47! The links provided were informative but didn’t really offer an answer or solution. By the way, my salary is significantly more than her’s and so our community property AGI is higher than what her true AGI would be. That’s probably important information I should’ve mentioned.

To your point about possibly supplying written documentation explaining your income. I was thinking about maybe getting a CPA to calculate her pure AGI and then providing documentation of this to the loan servicer. Just thinking there would be a simpler way in doing this for folks living in community property states.

I’m surprised there’s not more people in this situation. I guess maybe others have the opposite situation and reap the rewards of listing their community property AGI versus their true Gross Income?

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Total Posts: 154

Joined 2015-01-08

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I would guess most people don’t even pay attention….let us know what you find out!

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Joined 2017-05-24

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Anyone else have any insight or advice?

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Joined 2018-11-02

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hsilva83 Any luck on this? I’m totally in the same boat.