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What is “substantially different”?
I recently did my annual IBR income update using my most recent tax return. My AGI was about $32K. At the time of this update, my income was about $48K (gross). I chose not to click the box indicating that my income was “substantially different” because I couldn’t find anything defining substantial, and I decided $16K wasn’t substantial.
A few days later, I decided that I did not want to be applying for PSLF and have someone say “This applicant had a substantially different income and didn’t update correctly.” So, I sent the following e-mail to my loan servicer (Nelnet):
I recently updated my IBR information. My next payment is due on 7/25/2014. I want to verify that I updated my IBR correctly.
The form (OMB No. 1845-0102) asked whether “your current income or your spouse’s current income (if you completed Section 3 or file a joint federal income tax return) significantly different than the income used to determine the Adjusted Gross Income* (AGI) reported to the IRS on your most recently filed federal income tax return? ?
I checked the NO box. My AGI on the form I submitted was $32,678. My new job pays me about $48,000 (gross - I don’t know what the AGI would be after deductions). I looked for a definition of “significantly different” but couldn’t find one. The difference didn’t seem “significantly different” to me, which is why I checked “NO.”
But, I want to make sure that I’m in compliance. Please advise whether the form I turned in is acceptable, or whether you deem my new income “significantly different” in which case I can submit whatever documentation you need.
I received the following response:
Thank you for contacting Nelnet.
Our records indicate that your request for the Income-Based Repayment Plan was received and processed correctly. Your monthly payment amount is $113.53 for 12 payments. Your next scheduled payment is due on 07/25/2014 for $113.53.
I don’t feel like their response was responsive to my query. But, I also feel like I have disposed of my duty to update.
Does anyone have thoughts on whether I should take further action or whether I’m in the clear?
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I’ve also been wondering about this, Scranton. I posted this similar question that I have, on this thread (http://forums.studentdoctor.net/threads/adjusted-gross-income-agi-when-consolidating-loans-for-ibr.1033976/):
So, when I recertify next year (by July 2015) for IBR, and the form asks me if my current income is significantly different than the income reported on my most recent (i.e. 2014) federal income tax return, do I have to say “no,” since I was employed for only half the year in 2014, and the income on my 2014 tax return will thus be only half what my income in 2015 will be?
...It’s weird having your monthly IBR payment amount being based on your previous year’s income, when you recerify in the middle of the year…
UPDATE: here’s another way to put my question:
How do I compare my “current income” to the income reported on my “most recent federal income tax return” and decide whether the two are “significantly different”?
Should I multiply my current monthly income by 12 and compare that number to my gross income on my last federal income tax return?
Or, should I calculate what my total income has been from the past 12 months to the present and compare that number with my gross income on my last federal income tax return?