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I can find a lot of resources that talk about the impact that different filing statuses have on student loans (example1, example2). My wife is pursuing a Public Service Loan Forgiveness, meaning the balance of the loan is irrelevant to us. As such, we've previously been advised to use an income based repayment option.

If we file jointly, my (higher) income increases her payments. However, if we file separately, the amount of taxes we pay is much higher.

My question is, what prevents me and my wife from amending our prior year taxes and refiling as jointly? It's 2023 now, so on our 2022 taxes we'd file separately and use that to determine her loan payment based on just her income and amend it the following year so that we get all the tax benefits of being married filing jointly?

We would save many thousands of dollars each year by doing this.

I can find things that say I can do this:

Note: Once the tax return has been filed as Married Filing Separate (MFS), you have three years from the original deadline to make the change to the tax return. This deadline DOES NOT include any filing extensions.

This feels like cheating...but why isn't everyone pursing the various types of loan forgiveness just amending their returns?

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    The more accurate word instead of cheating would be fraud. You may find references to that in legal literature.
    – littleadv
    Apr 6, 2023 at 16:45
  • Avoidance is very different than evasion, and that's why I'm asking the question. Lots of websites discuss choosing the best filing status in an attempt to legally minimize taxes and that feels like cheating to me too. And parents deciding who gets to claim children to minimize their tax burden also feels like cheating to me. Certainly, if I were trying to commit fraud, I wouldn't post this first. But I also don't think it's obviously fraud. Taxes, according to the IRS can be changed. I'm not trying to hide my amendments or lie about them.
    – Rob P.
    Apr 6, 2023 at 20:09
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    Avoidance is when you decide to file MFS in order to pay less on student loans. Evasion / Fraud is when you tell them that you do, but you don't actually. The defrauded agency here is not the IRS, it's FAFSA.
    – littleadv
    Apr 6, 2023 at 20:24

1 Answer 1

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When you are on an income-based student loan repayment plan, each year you are required to “certify” your income with Federal Student Aid, which they then use to set your monthly payment amount. The word “certify” is used, because you are declaring the amount of your income to Federal Student Aid.

What you are talking about doing is telling Federal Student Aid that your income is one amount, and telling the IRS that your income is a different amount. And when you say it that way, it doesn’t sound like a very good idea, does it? If you amend your taxes in a way that changes the amount of income in a year that you have already certified, you need to contact Federal Student Aid and let them know. Certainly, before you decide to go ahead with the amended return, you should ask Federal Student Aid the question. Although I can’t find it explicitly stated at the moment, my guess is that they will recalculate your past payments and ask you to send in the difference.

The IRS will allow you to amend your past returns and file jointly. The question is, have you committed fraud by certifying to Federal Student Aid that you filed separately, when you have now filed jointly? Common sense would say "yes," but there have been weird loopholes in the rules before. If you are looking for the legitimate rules for this, I suggest you ask Federal Student Aid. If, however, you are simply hoping that they won't notice when you do this, I would not recommend it.

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  • And since both are Federal agencies... they may actually be communicating with each other, so it's not that they can't find out
    – littleadv
    Apr 6, 2023 at 19:51
  • To clarify - income would be factually reported from our W2s. Only my filing status would change and the IRS says I can choose my filing status and amend it, up to three years after the due date. This is the document to 'certify' (studentaid.gov/sites/default/files/…) but it doesn't ask for prior years nor does it say it needs to be updated if prior year taxes are amended.
    – Rob P.
    Apr 6, 2023 at 20:04
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    @RobP. The IRS isn’t the issue. Yes, they will let you amend your return. The question is, have you committed fraud by certifying to Federal Student Aid that you filed separately, when you have now filed jointly? Common sense would say yes, but there have been weird loopholes in the rules before. If you are looking for the legitimate rules, I suggest you ask Federal Student Aid. If you are simply hoping they won’t notice, I would not recommend this.
    – Ben Miller
    Apr 6, 2023 at 22:32
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    "Weird loopholes" -don't go looking unless your are a tax professional.
    – paulj
    Apr 7, 2023 at 11:45
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    @BenMiller-RememberMonica your whole last comment about loopholes should be the actual answer (or at least heavily modify it).
    – RonJohn
    Apr 8, 2023 at 0:40

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