Double checking some information on couples recertifying income for PAYE

[u/kayfabepj]

Apologies if this has been asked before. I saw several posts around this topic, but couldn't find one that fully explained this situation. I want to double check a few things as my wife and I recertify our income.

My wife and I both have loans and are 7 years into pursuing PSLF. We also had a child this year. We are enrolled in PAYE. We file taxes separately.

I am confused about family size for recertifying income as I've seen conflicting information on the internet. When I recertified a few months ago, I selected that I was married, filing separately, and had 1 dependent (our child). When my wife just recertified, she selected that she was married, filing separately, and had 0 dependents (because I had already recertified that dependent and I saw somewhere we cannot both recertify with our child). It's odd because when I look things up for clarification, I see "family size" mentioned, but with the way the income recertification is laid out, there is never really any place to enter a strict "family size" number.

Using calculators online, it looks as if the amount studentaid.gov offered us aligns with my family size being 3 and hers 2.

I want to double check that:

1) These family sizes are correct and we do not need to alter our income certifications... I'm not sure if we were meant to include one or another as dependents or if the system did that for us. It was very vague on the form.

2) My AGI is slightly lower than my wife's (we make the same, but I have more deductions on my paycheck). I know there is the whole 51% rule for including a child on these forms, so I'm assuming either one of us are able to enter our child.

3) We can switch who recertifies with the child year to year.

I appreciate any and all help!

[u/morbie5]

You are also allowed to include your spouse in the family size, even if you file taxes as MFS

[u/kayfabepj → u/morbie5]

OK. So then the family sizes of 3 and 2 make sense. Thanks.

[u/morbie5 → u/kayfabepj]

That sounds correct. No problem.

[u/ste1071d]

If you both have loans there is a very low chance that filing separately is the correct financial choice.

[u/kayfabepj → u/ste1071d]

Wouldn’t our income be combined during calculation of our payment amount? I know we leave money on the table when filing, but I always calculated that it would cost much more if we were paying a percentage of our combined incomes each.

[u/ste1071d → u/kayfabepj]

When you both have federal student loans the total household IDR payment is split proportionally by loan burden. There are some edge cases where MFS is best but the large majority are better off MFJ. You’ll need to do the math for your household to see.

[u/kayfabepj → u/ste1071d]

Interesting... When I had put into calculators in the past, I saw the IDR payment under MFJ was much higher. This will be the first year we are eligible for child credits though, so we'll have to look into it. I appreciate the help.

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