Married Filing Separate for Student Loans: When to Do It

Are you thinking about filing your taxes married filing separate for student loan purposes? I'm going to show you in this video some tricks and tips that you will not get anywhere else as well as a Calculator that you won't find anywhere else to use for your specific situation to figure out if you would be paying extra money in taxes and What if any benefit that you might get in a student loan payment reduction because of filing separate for taxes? So I'm going to show you all this in this video get ready. This is going to be really valuable money saving information So when do you do married filing separate for student loans? So first you probably should be the only one with a student debt if you both have student debt There are some situations where you'd file separate, but it's rare So primarily both of you, you know You would file separate for taxes if one of you has student loans and you want to exclude Your spouse's payment from your income driven repayment number, right? So in addition to you having the only person having the debt you also want to be able to get forgiveness on that debt So if you have federal student debt, obviously, that's the stuff that's eligible for income driven repayment So if you cannot get forgiveness on the debt There's really no point to getting a temporary payment reduction by filing separate if ultimately you're gonna have to pay it back Anyway, so third the cost of filing separate should be ideally smaller than the payment Benefit that you're getting so the words the cost of filing separate needs to be a cheaper cost Then you know the benefit you're getting on your student loans. Otherwise, why would you file separate in the first place, right? So for example, let's say you have you know $2,000 annual extra cost of filing separate for taxes, right? And let's say your student loan payments are lower by $1,000 a month or $12,000 a year because you filed separate Well, that's a good trade because you're saving 12,000 of your student loans for a cost of 2,000 on your taxes Now if you do need to amend your taxes, there are some situations Particularly for people who have Multi-thousand dollar costs extra from filing separate to there's there's some benefit in some cases to amending your tax return So when should you amend your tax return? Generally speaking I think the cost should be above $2,000 for filing separate to justify doing it because you're getting extra eyeballs extra work, you know on your return It's just a lot. And so if you have a mild cost of filing separate I personally would just say let's move on with my life But if you have a significant cost of filing separate then you might want to have a professional help you out amending that return It was something called 1040 X that you can use up to three years in the past and you can get any extra cost from Filing separate back as a refund by amending to joint that you cannot do joint to separate You can only go from separate to joint on an amendment something worth worth knowing and Number five is the juice worth the squeeze. So that's you know, I grew up in Florida That's a common saying right? Basically, is it worthwhile to do all this extra work of filing separate, you know Just to benefit on your student loans. Is there enough of a benefit where it's worth you thinking about it? So now I'm going to show you a calculator that you can use to figure out What is the potential extra cost of filing separate? So one second as I pop that up All right on the student loan planner website if you go to the drop down for calculators and you do the married filing separate calculator You can put in all your information So if you want to put in a hundred thousand of income each and then you can put in a number of kids daycare expenses dependent FSA contributions Kids in college who owns a small business. Did anybody adopt any children and if all of these things here are You know zero and there's really no extra cost of filing separate really the cost is pretty negligible But if you put in a very large difference in incomes What you're gonna see there is there's a large extra cost of filing separate and that just comes from putting the Spouse with a higher income into a much higher tax bracket now There are some situations to where spouses with you know More modest incomes could pay a lot more in extra taxes. For example, if you adopt a child, that's a huge cost for filing separate Sometimes if you put in dependent care FSA amounts, especially if you put in amounts that are above the cap for married filing separate Daycare expenses sometimes can run up costs for filing separate. So it really does depend You know on what your basket of costs are to figure out what is this? You know, what is this cost specifically now one nice thing is if you live in a community property state Those are states like California and Texas, you know sometimes if you live in a state like that You're able to split the income 50-50 down the middle and eliminate most if any extra cost of filing separate So these are all things that you can do this page has a lot of useful information if you scroll down you can see a lot of different stuff about Different pros and cons of filing separately and what are the most common problems we see with folks that file separate for taxes You know again One of the things when I said is the juice worth a squeeze a lot of times tax authorities or agencies will send you notices Because your w-2 withholding might be off if you file separate or you know You could have just um, you know an amount due especially in a community property state where you're having to split the income 50-50 Somebody's withholding could be off and you might get notices in the mail saying, you know, why didn't you withhold right amount? So this is not a zero cost thing either from a financial perspective or a mental space perspective And so again, you just want to make sure that it's worthwhile for you And again this calculator you can just go to the tax calculator drops Tax calculator drop down on our site and then you can see other ones as well So if you have any questions about filing separate for your taxes put them in the comments and thank you so much for watching student loan planner