For most couples, filing jointly is your best option at tax time. But borrowers with federal student loans under the IBR, PAYE, or ICR income-driven repayment plans could benefit from filing separately.
Getting married is a major milestone in a relationship, and it can create a new relationship with your student loans. Like many other financial issues, student loans and marriage can be tough.
Whether you or your spouse or both have student loans, you must determine the best new way of filing taxes now that you’re married. In most cases, filing jointly is your best bet—but student loan repayment could change that.
In this guide:
Student loan interest tax deduction for married couples
If you or your spouse are repaying federal or private student loans, you may be able to claim a student loan interest tax deduction. Current tax code allows student loan borrowers to deduct up to $2,500 in student loan interest paid during the tax year.
For some borrowers, this deduction (which reduces your taxable income) can equate to hundreds of dollars in tax savings.
>> Read more: Student Loan Interest Tax Deduction Calculator
To be eligible for the student loan interest deduction:
- You must have paid interest on qualified loans during the tax year for which you are filing.
- You must have income less than the limit set by the IRS.
- You cannot be claimed as a dependent on another individual’s tax return.
For married borrowers, another requirement can affect how you choose to file taxes: Married couples must file jointly to be eligible for a student loan interest deduction.
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- Track your spending (individually and together) to see where your money is going
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- Split transactions to keep tabs on who owes who
Pros & cons of filing separately in marriage
- Your spouse’s income won’t be considered when determining your monthly payment for an income-driven repayment plan, keeping the payment lower (for all plans except REPAYE).
- You may not have to take the student loan interest deduction into account if you claim the standard deduction — that is, if your itemized deductions would be less than $12,200 individually or $24,400 together for 2019.
>> Read More: How Do Student Loans Affect Taxes?
Author: Dave Rathmanner
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