Hi Heather,

My wife graduated recently and working for a 501 (c) organization and wants to utilize Public Loan Forgiveness Program. Her student loan is at 131K. Our projected combined income will be 115 K for 2012 (will be growing in coming years) and based on the IBR calculators we have to pay the following:

$96/Month - If filed separately ($42K/year - Wife’s income only)
$1049/Month - If filed jointly ($115K/Year)

We have 2 dependents and house mortgage. Based on our situation what will be beneficial for us in terms of tax filing? Also, what tax credits are available to us if we file Married but file Separately? Can we deduct mortgage interest rate?

Thanks,

AJ

Hi, AJ.  I’m not a tax specialist but I have friends who are!  I recommend you start with the free assessment from GLAdvisor here: http://gladvisor.com/lawgrad and then talk to one of their advisors about the tax questions.  You are certainly asking the right questions, because you are likely to see increases in your tax burden from filing separately.  The question is whether the student loan benefits outweigh the tax consequences or not.  Let us know how it goes.