So, I have loans on the IBR, and my husband will be unemployed at the end of this month (end of December). I was planning to recertify income immediately to lower my payments, but in looking over the recertification information, it looks like they just take information from pay stubs to recertify. Every year, we contribute to Traditional IRAs in order to get the AGI down further, but I can’t see a way to get credit for this AGI reduction if the recertification is based on my pay stub – IRA contributions aren’t reflected there. Can I include a statement about this? Will it make any difference? The reduction in income from his job loss won’t show up on tax returns until 2121.
May 3, 2014
You are definitely right about the delay in time for things to show up on the most recent tax return.
I’d suggest calling your loan servicer to discuss this issue. If you don’t do the standard certification via pulling tax records, the math can get fuzzy. You are right about the IRA contributions not showing up on your pay stub, so this issue will require at least one phone call, possibly more. (You may also need to do some followup to make sure that they made the calculations correctly).
I’d suggest running your numbers with this tool: https://studentloans.gov/myDirectLoan/repaymentEstimator.action
With an accurate estimate, you can make sure that calculations are done correctly.
If you do decide to go the paystub route, I assume they use gross income not net pay? 401k pretax contributions come out of your check directly and ARE reflected, but they wouldn’t know if you were going to continue like that I guess? So, would they use the net pay period and calculate it out or gross income? I would guess gross income and its better to just use your tax returns?
May 3, 2014
generally speaking, it is best to use your tax return, because it allows you to take full advantage of tax deductions. Using paystubs can be hit and miss depending upon the person reviewing your paystub and the way it is formatted.
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