My question is whether the benefit of filing MFS is greater than MFJ in regard to tax refunds. I know there is a similar pending post, but here is my situation:

General facts:

1. My husband and I have been married for 5 years and we had a baby in 2013.
2. Our loans are separate
3. We had been filing our taxes as MFJ in the state of VA (not community property)
4. My loans = $97k (2 consolidated direct loans), husband’s loans = $50k
5. My salary = $55k (I qualified for Public Service Loan forgiveness), husband’s salary = $61k (private sector = no forgiveness).

Loan total = $147,000
Salary total = $116,000

I am in a forbearance right now (until March/after taxes). I have received IBR paperwork because my employment qualifies for the Public Service Forgiveness Program.  We have filed our taxes MFJ since we have been married, but plan on MFS this year in order to get a lower Income-Based Repayment Plan.

Together, under MFJ, we can’t afford to pay the IBR repayment plan unless we file separately. If we don’t file together, my payments will drop from $620 a month to $415. This would be amazing, considering we pay for daycare and live in an expensive part of the county. :-/

We know if we file jointly, we will get back $4k this year (but we also had a child and purchased a home in 2013). I don’t think it will be this high in the future.

Questions:

1. Is it worth it? I’m leaning towards yes b/c the loan would be forgiven after 10-years. And with nearly a 6-figure loan balance, I don’t think $4k a year for 10 years would make it less appealing to do. I’m not just asking to hear someone reiterate my opinion. If you have another point of view I would definitely consider it.

2. Knowing that the student loan companies will ask for last year’s tax returns (for IBR calculation purposes); should I also plan on submitting a copy of this year’s returns since we will be filing MFS - which will show our income as separate?

THANK YOU!
This blog is amazing and a wealth of information. I’ve even directed my accountant here…  :-)