My question is specifically regarding what qualifies as “most recent” tax return when filing the renewal, and has anyone ever done the scenario below….

So as a newlywed, I am faced with the decision of filing MFS v MFJ.  My loan payment on IBR is approximately $420/month currently.  If I file my taxes jointly, it will go to approximately $1,100/month. My husband is not able to contribute, since he pays the mortgage.  So that doesn’t seem like an option. However, we then lose any tax benefits we would get filing jointly (one being that I can no longer claim my student loan interest if we file MFS, and it makes about a $600 difference in my return. bummer!).  Then, when it’s time for kids, we will lose child care credits.

Example:

Year 1: Renew IBR first, using last years tax return number, since it is the most recent. THEN file taxes jointly to reap the tax benefits.

Year 2: File taxes MFS first.  THEN renew IBR, using Year 2’s tax return, since it is now the most recent. (Thereby skipping having to report Year 1’s MFJ taxes.)

Year 3: Renew IBR first, AGAIN using Year 2’s tax return (MFS) since it is STILL the “most recent” tax return.  THEN file taxes MFJ. 

Etc. etc. 

I feel like that is an easy loop hole to find, however using the same tax return twice, although technically it IS still the most recent, seems like it would set off a red flag.  I figure worse comes to worse, we can at least use that plan for the first 2 years to reap the tax benefits of year 1, and then just file separate from there on out, rather than flip flopping.

(The fact that it estimates my balance will double in 20 years, come time for forgiveness, since my IBR payments don’t even cover the interest, is another whole sickening issue entirely.)