\n<\/p>\n
Insider’s experts choose the best products and services to help make smart decisions with your money (here\u2019s how<\/a>). In some cases, we receive a commission from our partners<\/a>, however, our opinions are our own. Terms apply to offers listed on this page.<\/p>\n\nUnder a Biden administration plan, married couples filing taxes separately could get student-loan payments eliminated altogether.<\/li>\nWhen filing separately, you can use your lower AGI to get lower monthly payments.<\/li>\nTalk to an accountant to compare how much you’ll lose when filing separately to how much you’ll save in student loan payments per year.<\/li>\n<\/ul>\n\n\n\n Loading<\/title>\n <desc>Something is loading.<\/desc>\n <path fill=\"#111\" d=\"M43.935,25.145c0-10.318-8.364-18.683-18.683-18.683c-10.318,0-18.683,8.365-18.683,18.683h4.068c0-8.071,6.543-14.615,14.615-14.615c8.072,0,14.615,6.543,14.615,14.615H43.935z\">\n <animatetransform attributetype=\"xml\" attributename=\"transform\" type=\"rotate\" from=\"0 25 25\" to=\"360 25 25\" dur=\"0.6s\" repeatcount=\"indefinite\"\/>\n <\/path>\n <\/svg><\/div>\n<div class=\"success-container__mobile d-none\">\n<p>Thanks for signing up!<\/p>\n<p>\n Access your favorite topics in a personalized feed while you’re on the go.<br \/>\n <button class=\"rounded-button headline-bold white-button download\" type=\"white\"><br \/>\n download the app<br \/>\n <\/button> <\/p>\n<\/p><\/div>\n<\/section><\/div>\n<p>You may see lower student-loan payments \u2014 with some having to pay nothing at all \u2014 when the federal student-loan payment pause ends, tentatively in June 2023.<\/p>\n<p>Under new <a href=\"https:\/\/www.businessinsider.com\/what-is-the-new-income-driven-student-loan-repayment-plan-2023-1\" target=\"_blank\" rel=\"noopener\" data-analytics-module=\"body_link\">proposed regulations for an income-driven repayment<\/a> (IDR) plan, discretionary income would be calculated at 225% of the federal poverty guidelines instead of 150%, and monthly payments will be capped at 5% of discretionary income instead of 10%.<\/p>\n<p>Payments under the plan \u2014 known as Revised Pay as You Earn, or REPAYE \u2014 are calculated using the following factors:<\/p>\n<p>Travis Hornsby, a chartered financial analyst (CFA) and founder <a href=\"https:\/\/www.studentloanplanner.com\/\" target=\"_blank\" rel=\"noopener nofollow\" data-analytics-module=\"body_link\">Student Loan Planner<\/a> says typical undergraduate borrowers could see their payments reduced by two-thirds under the proposed changes.<\/p>\n<p>Married couples could lower their monthly payments even more by filing their taxes separately, Hornsby says. Here’s how it works:<\/p>\n<h2>How to calculate your new monthly payment<\/h2>\n<p>If you file a joint tax return, student loan servicers will look at your family size, calculate a marital IDR payment, then split it proportionately based on each spouse’s debt amount, Hornsby says.\u00a0<\/p>\n<p>For example, take a married couple making $114,000 in combined annual gross income, with one dependent and a total of $68,000 in student loans.<\/p>\n<p>Under current IDR regulations, the couple will owe $639.25 per month on their student loans.<\/p>\n<h3>Use this equation to calculate your new monthly student-loan payments<\/h3>\n<p style=\"text-align: left;\">Here’s an equation you can use to estimate your new monthly student-loan payments, factoring in the new proposed IDR regulations.<\/p>\n<p style=\"text-align: center;\"><strong>Your annual gross income – (federal poverty guideline x 2.25) = Your discretionary income<\/strong><\/p>\n<p style=\"text-align: center;\"><strong>(Your discretionary income x 0.05) \u00f7 12 = Your new monthly payment<\/strong><\/p>\n<p style=\"text-align: left;\">Using the example of the couple above, their new monthly payment would be $241.94.<\/p>\n<p style=\"text-align: center;\"><strong>$114,000 – ($24,860 x 2.25) = Their discretionary income is\u00a0<u>$58,065<\/u><\/strong>.<\/p>\n<p style=\"text-align: center;\"><strong>($56,085 x .05) \u00f7 12 = Their new monthly payment is\u00a0<u>$241.94<\/u>.<\/strong><\/p>\n<p style=\"text-align: left;\">Under the new IDR proposal, the couple’s payments would be about 62% lower than before.<\/p>\n<p style=\"text-align: left;\">If you want to lower your student-loan payments even more, Hornsby says filing taxes separately might be beneficial.<\/p>\n<p style=\"text-align: left;\">For the example above, Hornsby says: “If you filed separately, you’re both going to deduct a family size of two. You get to have the deduction on your payment <em>and\u00a0<\/em>your spouse’s payment.”<\/p>\n<h2>Lowering your AGI is the key to getting lower student-loan monthly payments<\/h2>\n<p>Following the example of the couple above, Spouse B, who makes $44,000 and claims one dependent, will have a monthly payment of $0.<\/p>\n<p>Here’s a table that shows which income levels qualify for $0 monthly payments:<\/p>\n<h6>* For the 48 contiguous states and the District of Columbia<\/h6>\n<p>Using the equation above, you only need to calculate IDR payments for Spouse A, who earns $70,000 annually, with a family size of two to account for their dependent.<\/p>\n<p style=\"text-align: center;\"><strong>$70,000 – ($19,270 x 2.25) = $25,630<\/strong><\/p>\n<p style=\"text-align: center;\"><strong>($25,630 x 0.05) \u00f7 12 = Their new monthly payment is <u>$106.79<\/u>.<\/strong><\/p>\n<p style=\"text-align: left;\">Compared to a monthly payment of $241.94 under the new proposed IDR regulations, the couple in the example above could save an additional $135.19 per month \u2014 $1,621.80 annually \u2014 by filing their taxes separately.<\/p>\n<h2>Compare potential tax losses with the savings from lower student-loan payments<\/h2>\n<p>The lower student-loan monthly payment may be enticing, but filing separately may not be the best move for every couple.<\/p>\n<p>Hornsby adds: “For most people, it’s gonna cost $500 to $1,000 to file separately. The one caveat to this strategy is the difference between the couple’s incomes. If one spouse makes $100,000 and the other makes $0, filing separately might result in a larger tax penalty than the savings on their payments.”<\/p>\n<p><a href=\"https:\/\/tobiasfinancial.com\/team\/marianela-collado\/\" target=\"_blank\" rel=\"noopener nofollow\" data-analytics-module=\"body_link\">Marianela Collado,<\/a>\u00a0senior wealth advisor and CEO of Tobias Financial, advises couples to look out for the following tax penalties when filing separately:<\/p>\n<ul>\n<li><strong>Allowable capital gains losses will be cut in half, from $3,000 to $1,500 per person. <\/strong>If you have an <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/how-to-invest-in-stocks\" target=\"_blank\" rel=\"noopener\">investment portfolio<\/a> that suffered losses during a volatile market, you will only be able to write off $1,500 of those losses.<\/li>\n<li><strong>Roth IRA threshold drops to $10,000 annually.<\/strong> Married couples with an AGI of $218,000 or less can contribute up to $6,500 to their <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/what-is-roth-ira\" target=\"_blank\" rel=\"noopener\">Roth IRA<\/a>, according to the <a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/retirement-topics-ira-contribution-limits\" target=\"_blank\" rel=\"noopener\">IRA’s 2023 contribution limits<\/a>. However, if you earn over $10,000 as a married person filing separately, your Roth IRA contributions will be taxed at 6%. Says Collado, “When married couples file separately, the threshold drops to $10,000, which basically means they won’t be able to make a Roth IRA contribution.<\/li>\n<li><strong>You won’t be able to claim a tax deduction on student-loan interest paid throughout the year.\u00a0<\/strong>All student loans, including private and refinanced student loans, are eligible for a tax deduction of up to $2,500 for student-loan interest paid throughout the year. Collado says, “That’s an above-the-line deduction,” a deduction that could chip away at your taxable income overall. When filing separately, married people are no longer eligible to claim the $2,500 student-loan interest tax deduction.<\/li>\n<li><strong>You won’t be able to claim as much rental-related losses. <\/strong>Married couples with rental properties, who earn an AGI of $150,000 or less and file taxes jointly, can deduct up to $25,000 in rental-related losses. If you’re now filing separately, says Collado, the income threshold is sliced in half at $75,000, and you can only deduct up to $12,500 in rental-related losses. “In this case, tax savings may be lost if a married couple files separately,” she adds.<\/li>\n<\/ul>\n<p>Collado recommends working with an <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/should-i-do-my-own-taxes-or-hire-accountant\" target=\"_blank\" rel=\"noopener\" data-analytics-module=\"body_link\">accountant<\/a> or <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/cfp\" target=\"_blank\" rel=\"noopener\" data-analytics-module=\"body_link\">financial planner<\/a> to compare your tax losses to your cash flow savings with lower student-loan payments. If you’re making monthly minimum payments toward the <a href=\"https:\/\/www.businessinsider.com\/personal-finance\/pslf-student-loan-forgiveness-keywords-to-know-2022-8\" target=\"_blank\" rel=\"noopener\" data-analytics-module=\"body_link\">Public Service Loan Forgiveness Program<\/a>, for instance, it might be beneficial to pay the absolute minimum until you reach your required 120 payments for forgiveness.<\/p>\n<p>She adds, “I would step back even more and look at the big picture. You’re freeing up cash flow, but you’re still accruing interest and the liability isn’t going away.”<\/p>\n<section class=\"post-authors\" data-component-type=\"post-author\">\n<\/section><\/div>\n\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMie2h0dHBzOi8vd3d3LmJ1c2luZXNzaW5zaWRlci5jb20vcGVyc29uYWwtZmluYW5jZS9tYXJyaWVkLWZpbGluZy10YXhlcy1zZXBhcmF0ZWx5LWxvd2VyLXN0dWRlbnQtbG9hbi1tb250aGx5LXBheW1lbnRzLTIwMjMtMdIBf2h0dHBzOi8vd3d3LmJ1c2luZXNzaW5zaWRlci5jb20vcGVyc29uYWwtZmluYW5jZS9tYXJyaWVkLWZpbGluZy10YXhlcy1zZXBhcmF0ZWx5LWxvd2VyLXN0dWRlbnQtbG9hbi1tb250aGx5LXBheW1lbnRzLTIwMjMtMT9hbXA?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Insider’s experts choose the best products and services to help make smart decisions with your money (here\u2019s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page. Under a Biden administration plan, married couples filing taxes separately could get student-loan …<\/p>\n","protected":false},"author":1,"featured_media":46979,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/46978"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=46978"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/46978\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/46979"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=46978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=46978"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=46978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}