Managing Income-Driven Repayments PSLF Booster #3
Managing Income-Driven Repayments PSLF Booster #3 Another easy way to potentially boost PSLF benefits for married, dual-income households is by analyzing the tax and student loan implications of filing separately vs. jointly. Filing separately often brings negative tax implications and positive PSLF benefits. The key is the NET benefit of this ple: a couple might pay $1,000 in additional income taxes by filing separately, however, by doing this, they reduce income-driven payments by $6,000 in the following year. This reduced payment results in pure savings when going for PSLF. Therefore, their net benefit from filing separately is $5,000. You must perform this analysis every year before filing taxes to determine how it shakes out. It’s surprisingly common to see that filing separately provides much more net value when considering both taxes and PSLF. You can play with the numbers using the Federal Student Aid’s repayment estimator it allows you to input filing separately or filing jointly. At a minimum, it’s well worth your time or the cost of paying for help to run these numbers each year! To further make a point, let’s say instead that this person used a credit card to pay the IBR payments for those 6 months Understanding how they verify income is KEY.
