Married Medical students: file taxes seperately or joint?

[DreamerZee88]

Hey guys...seeking advice on what to do about taxes. I know im close to the deadline here, so hoping to get some insight on what others are doing soon.

My husband is non medical professional and im a 4th year about to graduate and start residency in June, i have heard if i file separately and show that I have 0$ income, I wont need to make payments on my student loans right away until next year with my new income. Is this true? If I could get some time and extend those payments it would help us greatly. Those students that are at this point now, or residents last year, did you guys have to show your paystub even if you filed with 0 income that year? Do i have to file separately to get that benefit of not paying right away, or can we file jointly and show that i have 0 income on that and still be able to extend?

Also, the reason I want to be sure that i can benefit from filing separately before I do so, is because my husbands can use my loan/spouse deductions in his payment back to the government. If im not going to benefit by extending loan payments, i will go ahead and file jointly with him, but if I could extend repaying than I will file separately.

Any one have any idea or clue on whats the best thing to do?
Also, I know forbearance i can apply for, dont they have certain criteria to even be approved for that?
Thanks in advance!

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[libertyyne]

Get an accountant.

 

[andrek82]

Agree with at least a tax preparer, but an accountant would be better. Joint filing would get you education benefits and thus potentially a higher refund , but like you said would increase your likelihood of having some sort of loan payment on IBR.

 

[Save a life]

Hey guys...seeking advice on what to do about taxes. I know im close to the deadline here, so hoping to get some insight on what others are doing soon.

My husband is non medical professional and im a 4th year about to graduate and start residency in June, i have heard if i file separately and show that I have 0$ income, I wont need to make payments on my student loans right away until next year with my new income. Is this true? If I could get some time and extend those payments it would help us greatly. Those students that are at this point now, or residents last year, did you guys have to show your paystub even if you filed with 0 income that year? Do i have to file separately to get that benefit of not paying right away, or can we file jointly and show that i have 0 income on that and still be able to extend?

Also, the reason I want to be sure that i can benefit from filing separately before I do so, is because my husbands can use my loan/spouse deductions in his payment back to the government. If im not going to benefit by extending loan payments, i will go ahead and file jointly with him, but if I could extend repaying than I will file separately.

Any one have any idea or clue on whats the best thing to do?
Also, I know forbearance i can apply for, dont they have certain criteria to even be approved for that?
Thanks in advance!

I’m only an M1 not graduating but my experience being married and having loans in undergrad and my wife having grad school loans is that your 6 month grace period is good no matter what your spouse or you are doing. That is, you should be able to get away with making no payments until December or January regardless of income. You shouldn’t even have to file for forbearance. The loan exit counseling should explain all this. I have jointly filled the last 3 years and it worked out well. Particularly that first year, you get a good tax break by stating that you got married in the last year.

 

[Raryn]

Hey guys...seeking advice on what to do about taxes. I know im close to the deadline here, so hoping to get some insight on what others are doing soon.

My husband is non medical professional and im a 4th year about to graduate and start residency in June, i have heard if i file separately and show that I have 0$ income, I wont need to make payments on my student loans right away until next year with my new income. Is this true? If I could get some time and extend those payments it would help us greatly. Those students that are at this point now, or residents last year, did you guys have to show your paystub even if you filed with 0 income that year? Do i have to file separately to get that benefit of not paying right away, or can we file jointly and show that i have 0 income on that and still be able to extend?

Also, the reason I want to be sure that i can benefit from filing separately before I do so, is because my husbands can use my loan/spouse deductions in his payment back to the government. If im not going to benefit by extending loan payments, i will go ahead and file jointly with him, but if I could extend repaying than I will file separately.

Any one have any idea or clue on whats the best thing to do?
Also, I know forbearance i can apply for, dont they have certain criteria to even be approved for that?
Thanks in advance!

If you file separately with zero income, you should be able to get lower IBR/REPAYE payments next year (zero is possible depending on your loan processor)

If you file jointly, your husband will save significant money on his taxes (i.e. you should get a significant refund).

Be careful though, because depending on what state you're in, you might not be allowed to file separately.

I’m only an M1 not graduating but my experience being married and having loans in undergrad and my wife having grad school loans is that your 6 month grace period is good no matter what your spouse or you are doing. That is, you should be able to get away with making no payments until December or January regardless of income. You shouldn’t even have to file for forbearance. The loan exit counseling should explain all this. I have jointly filled the last 3 years and it worked out well. Particularly that first year, you get a good tax break by stating that you got married in the last year.

6 month grace period is true no matter what. That said, what some people advocate doing is waiving the grace period and immediately starting payments under IBR/REPAYE. Traditionally, IBR/REPAYE payments are based on last years income. So lets say that you are single and graduated in 2016.

2015: You had zero income (were a student) and file a paper return stating so.
2016: You have half a years of income (intern year starts in July), so you file a return with a listed income of $25k (or whatever)
2017: You have a full years of income, so you file a return with your income of $50k

Meanwhile, you graduated in 2016, so if you then filed immediately under IBR in 2016, your first 12 payments (with a listed 2015 income of zero) would be... zero. Your next 12 payments, with a listed income of $25k, would be nominal (<$100/month). Only at the beginning of your third year of residency (July 2018) would you have to start making full payments.

Two caveats to that possibility though:
A) More and more loan issuers are requiring you to sign a statement attesting that last years income is a reflection of what you presume this years income to be, otherwise you have to fill out a form pre-emptively telling them what you are earning. This means that the 1-2 years of zero-minimal payments is going away for those issuers unless you flat-out lie (which is a poor decision given the DOE is always looking for reasons not to count IBR payments).
B) Filing jointly makes it impossible to do the above, which is what OP is asking. Is it better to file separately and get low IBR payments or file jointly and pay less in taxes? Without knowing a lot more specific numbers, it is impossible to say.

 

[ksturdy]

I’ve heard this, too. If you file separate and are on the income based repayment plan for you federal loans, your expected monthly payment will be $0. Also, that year of paying $0 (12 $0 payments) will count toward your 120 payments required for loan forgiveness.

 

[mehc012]

Wait, but...why would you ever file taxes when you have zero income? You never paid anything in to be 'refunded', so the education breaks don't really matter, and you're below the cutoff for when you're required to file. I've never filed income taxes as a student, because my income is zero when I'm a student.

 

[MedScat]

Wait, but...why would you ever file taxes when you have zero income? You never paid anything in to be 'refunded', so the education breaks don't really matter, and you're below the cutoff for when you're required to file. I've never filed income taxes as a student, because my income is zero when I'm a student.

I always file even with zero income. Throughout undergrad, I still got money back just because of my school expenses which makes no sense but, not complaining. I'm from NY and the tax system here makes no sense but, you should always file something in my experience.

EDIT: it actually doesn't matter that I'm from NY cause the money i got back was federal money

 

[libertyyne]

Wait, but...why would you ever file taxes when you have zero income? You never paid anything in to be 'refunded', so the education breaks don't really matter, and you're below the cutoff for when you're required to file. I've never filed income taxes as a student, because my income is zero when I'm a student.

There are different tax credits which vary in terms of how they get refunded. Some reduce taxable income, others reduce taxes, and lastly others that are fully refundable. Plus people's personal situations may dictate having to file or wanting to file. Having kids, investment accounts , mortgage , buying health insurance on the open market are all events that may make a difference in terms of taxes.

 

[mehc012]

I always file even with zero income. Throughout undergrad, I still got money back just because of my school expenses which makes no sense but, not complaining. I'm from NY and the tax system here makes no sense but, you should always file something in my experience.

EDIT: it actually doesn't matter that I'm from NY cause the money i got back was federal money

Huh. I tried filing 2x when I was in college and it always came out that I'd made nothing but work study income, got nothing back, paid nothing in. So I gave up on going through the hassle if I was under the federal limit. I've not filed taxes very many times in my life because of it.

There are different tax credits which vary in terms of how they get refunded. Some reduce taxable income, others reduce taxes, and lastly others that are fully refundable. Plus people's personal situations may dictate having to file or wanting to file. Having kids, investment accounts , mortgage , buying health insurance on the open market are all events that may make a difference in terms of taxes.

Sure, I get that if your personal situation is complicated (kids, assets, etc), your taxes are complicated. But if your assets and income are zero, you don't have to file, and most of the time it wouldn't help you to anyways, right? I thought a tax refund was just that...them giving you back some of the money which was withheld from your initial paycheck. And deductions are deductions from what you owe. Which, if you're not getting a paycheck and you don't owe anything, leaves you at zero still.

Just surprised at people filing taxes on zero income is all, and wanting to know if I was missing something major.

 

[libertyyne]

Huh. I tried filing 2x when I was in college and it always came out that I'd made nothing but work study income, got nothing back, paid nothing in. So I gave up on going through the hassle if I was under the federal limit. I've not filed taxes very many times in my life because of it.

Sure, I get that if your personal situation is complicated (kids, assets, etc), your taxes are complicated. But if your assets and income are zero, you don't have to file, and most of the time it wouldn't help you to anyways, right? I thought a tax refund was just that...them giving you back some of the money which was withheld from your initial paycheck. And deductions are deductions from what you owe. Which, if you're not getting a paycheck and you don't owe anything, leaves you at zero still.

Just surprised at people filing taxes on zero income is all, and wanting to know if I was missing something major.

tax credits, some of them dont require income.

 

[mehc012]

tax credits, some of them dont require income.

Yes, yes, the generic "but maybe in some very specific circumstances" clause, I get it. Doesn't really answer my 'most of the time' question, but to be fair, you guys aren't the ones I should be asking anyway.

I'll take the continued lack of a 'living on student loans' specific example as a "no, you aren't missing anything major", with the ever-present caveat that nobody knows for sure because the tax code is a mess and the government likes to reward you if you fit its ideal of the perfect citizen, whatever that happened to be when any given part of it was written.

 

[Raryn]

Wait, but...why would you ever file taxes when you have zero income? You never paid anything in to be 'refunded', so the education breaks don't really matter, and you're below the cutoff for when you're required to file. I've never filed income taxes as a student, because my income is zero when I'm a student.

Its just a quirk of the IBR/REPAYE system.

If you start intern year and have a 1040 from the year prior that claims you had zero income, you can get $0 payments the first 12 months. The 1040 is "proof" of your zero income.

No other reason to file it if you have no income at all, you won't qualify for those education credits in that situation typically.

 

[libertyyne]

Yes, yes, the generic "but maybe in some very specific circumstances" clause, I get it. Doesn't really answer my 'most of the time' question, but to be fair, you guys aren't the ones I should be asking anyway.

I'll take the continued lack of a 'living on student loans' specific example as a "no, you aren't missing anything major", with the ever-present caveat that nobody knows for sure because the tax code is a mess and the government likes to reward you if you fit its ideal of the perfect citizen, whatever that happened to be when any given part of it was written.

American Opportunity, Lifetime Learning Student Tax Credits
and I qoute
"

• 40% of the credit is refundable, so you may receive $1,000 per eligible student as a tax refund even if you owe no tax."

This is obviously only good for 4 years, but if you never filed taxes and your parents never claimed you you should be eligible. But I am not an accountant so you have to figure this out yourself.

There is also such a thing as loss harvesting or expense harvesting for future tax returns.

 

[mehc012]

Its just a quirk of the IBR/REPAYE system.

If you start intern year and have a 1040 from the year prior that claims you had zero income, you can get $0 payments the first 12 months. The 1040 is "proof" of your zero income.

No other reason to file it if you have no income at all, you won't qualify for those education credits in that situation typically.

Thank you! So there is reason to file taxes in M4, basically, which is really good to know because the odds of me doing so were pretty slim. Otherwise, unless you have additional factors (family, assets, income) or nobody ever claimed you (including you) during college so you have edu credits left, it's probably a wash.

American Opportunity, Lifetime Learning Student Tax Credits
and I qoute
"

• 40% of the credit is refundable, so you may receive $1,000 per eligible student as a tax refund even if you owe no tax."

This is obviously only good for 4 years, but if you never filed taxes and your parents never claimed you you should be eligible. But I am not an accountant so you have to figure this out yourself.

See, this included information and was actually helpful, thanks! I knew there was a reason I'd been ignoring the lifetime learning stuff.