Student Loan Payment Reduction Planning Using Married Filing Separate Status

Strategically reduce your student loan payments by choosing the Married Filing Separate tax status.

Get startedLearn more

Table of Content

Discover how Student Loan Payment Reduction Planning works

Married Filing Separate (MFS) is a tax filing status for married couples that can help lower student loan payments under income-driven repayment (IDR) plans. 

By filing separately, only your individual income is considered for calculating discretionary income, potentially lowering your monthly payments by excluding your spouse’s income from the calculation.

Required documents

To plan for student loan payment reduction using the MFS status, you will need:

  • Tax returns filed as Married Filing Separately.
  • Documentation of your income and your spouse’s income.
  • Records of your student loan balances and repayment plan details.

Benefits of Using MFS Status for Student Loan Reduction

  • Lower Monthly Payments: Potentially reduce your student loan payments by excluding your spouse’s income.
  • Financial Flexibility: Provides more financial flexibility by lowering your monthly obligations.
  • Tailored Repayment: Aligns your repayment plan more closely with your individual financial situation.

How to Implement MFS Status for Student Loan Reduction

  1. Evaluate Eligibility: Determine if filing separately will significantly reduce your student loan payments under your IDR plan.
  2. Consult a Tax Professional: Discuss the potential tax implications and benefits with a tax advisor.
  3. File Separately: Prepare and file your tax returns as Married Filing Separately.
  4. Adjust Repayment Plan: Contact your loan servicer to recalculate your student loan payments based on your new tax status.

 Important considerations

While filing separately can reduce student loan payments, it may also result in the loss of certain tax benefits, such as the Earned Income Tax Credit (EITC) and education credits. 

Additionally, MFS filers often face higher tax rates and a lower standard deduction. It’s crucial to weigh these trade-offs and consult with a tax professional to understand the overall impact on your tax situation and student loan payments.

For more detailed information, please refer to the IRS Publication 501 and the IRS guidelines on student loan payments.

Tax AI

Stay ahead with our advanced TaxAI

Get tax answers, useful insights, and proactive solutions to keep your tax affairs in perfect order.

 Grow your business

Take the financial stress off your business’ shoulders

Let CFOmate handle your finances so you can enjoy peace of mind while focusing on growing your business.