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Gina CPA
Gina CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 19
Experience:  CPA with 10 years of problem solving tax experience.
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My wife works profit, makes maybe 20% of my salary. I have

Customer Question

My wife works for not profit, makes maybe 20% of my salary. I have been told that she will only qualify for a student loan forgiveness program if we file our tax returns separately. Is that true?
Submitted: 9 months ago.
Category: Tax
Expert:  Gina CPA replied 9 months ago.

Hello, You will generally pay more combined tax on separate returns than you would on a joint return.

If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

  1. Your tax rate generally is higher than on a joint return.

  2. Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return.

  3. You can't take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. See Joint Return Test in Pub. 503, Child and Dependent Care Expenses, for more information.

  4. You can't take the earned income credit.

  5. You can't take the exclusion or credit for adoption expenses in most cases.

  6. You can't take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction.

  7. You can't exclude any interest income from qualified U.S. savings bonds you used for higher education expenses.

  8. If you lived with your spouse at any time during the tax year:

    1. You can't claim the credit for the elderly or the disabled, and

    2. You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received.

  9. The following credits and deductions are reduced at income levels half those for a joint return:

    1. The child tax credit,

    2. The retirement savings contributions credit,

    3. The deduction for personal exemptions, and

    4. Itemized deductions.

  10. Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return).

  11. If your spouse itemizes deductions, you can't claim the standard deduction. If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return.

Expert:  Gina CPA replied 9 months ago.

To directly answer your question, yes you may only qualify for student loan forgiveness because as you can see from the above information I posted, you don't qualify for any of the education credits if you file separate returns.

Does this fully answer your question today? I want to make sure I provide you with outstanding service.

Customer: replied 9 months ago.
Still a little confused does she only qualify for dept forgiveness is she files separately?
Expert:  Gina CPA replied 9 months ago.

Yes, that is all she could be considered for.

Expert:  Gina CPA replied 9 months ago.

Here is the link for the the forgiveness program. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

Expert:  Gina CPA replied 9 months ago.

Please let me know if you have additional questions, and don't forget to rate as that is the only way I know you are happy with my answer. Thank you :)