Income Contingent Repayment Married Filing Separately

Filing your federal tax return married filing separately will affect the monthly payment amount of your federal student loans.

Income contingent repayment married filing separately. An income contingent repayment icr is an income driven repayment option offered by the government for federal student loans. When does my spouse s income affect my income based repayment amount. For both income based repayment ibr and pay as you earn repayment paye your monthly student loan. Married loan borrowers could end up with a higher student loan payment than loan borrowers who are single.

For married couples with student loan debt one of the most popular strategies for lowering your monthly student loan payment and potentially qualifying for more student loan forgiveness is to file your taxes married filing separately. The income contingent repayment icr plan is an income contingent repayment plan under which a borrower s monthly payment amount is generally based on the total amount of the borrower s direct loans family size and agi. Income contingent repayment icr caps payments at 20 of discretionary income and offers forgiveness after 25 years. Filing jointly means your total household income generated by both you and your spouse is taken into consideration by an income driven repayment plan.

One thing to also note is that your payments could instead be capped by the amount of a fixed payment on your loans over a 12 year term if. Income driven repayment plans base student loan payments on a percentage of the borrower s discretionary income as opposed to the amount owed. It will have no impact on your private student loans which don t offer income based repayment plan options. Income contingent repayment icr was the first income driven repayment plan.

You know the basics of income driven repayment plans right. For a married borrower filing separately agi includes only the borrower s income. This program will generally limit payments to 20 of your discretionary income. The income based and income contingent repayment plans plus the paye plan allow married borrowers who file separately and are eligible for repayment under the specific plan to have their payments determined based on their income alone.

The exact impact filing taxes separately will have on your student loan payments will depend on. However married filing separately can substantially lower your loan payment explained mark struthers a certified financial planner who founded sona financial.