Faye1

I'm in the process of researching the full GC process before we go ahead and get married later this year.

I'm a Brit who has been living and working in the USA for 8 years. I work for a British company and file both UK and US tax returns (I have to file a 1040 along with a ton of other special forms as I claim US tax credit for the tax already paid in the UK)

I'm marrying a USC who is finishing his masters degree and so earns a minimal wage right now.

An issue has cropped up around myself and my fiance joint filing our taxes in the USA as he has negotiated a special payment plan for his rather scary student loan which is directly connected to his income.

Filing our incomes jointly would mean his student loans payments will suddenly jump from a manageable amount to over $900 a month which would be quite a problem for us both!

I don't know much about joint filing, so please excuse me if these are silly questions!

- I'm wondering firstly how essential it is for us to joint file our taxes for the green card process? (we live together, share a lease, bank account, credit card etc)

- Might there be a way to keep our earnings in somewhat 'separate' for student loan purposes whilst still fulfilling the needs of the immigration authority checks!?

- As a worst case scenario, could we joint file for two years and then go back to filing separately again?

I have both a UK and US accountant I will be speaking to this week to see if there is any way around this, but any help or advice in the mean time would be greatly appreciated

britishspouse

Well hubby and I filed jointly this year for the first time ever. I had to get an ITIN number from the IRS before I was able to file with him though. It certainly gave him a chunk more money now that we are married, filing jointly lol

I don't think filing jointly is a GC requirement, in fact hubby said we might file separate once im working over here. You could for sure file joint then separate, I dont think theres anything that says you have to file the same way every year. most married couples do file jointly it seems, but its up to the individual.

Hubby has student loan payments, and his remained the same however thats because im not earning anything right now, so cant really offer much insight into the benefits/negatives of filing jointly on two incomes.

meauxna

Faye, I moved your post so you can get better tax filing input in the USA forum. I see your questions are couched for the immigration aspect, so I'll just answer that: There is no immigration implication for filing married joint vs married separate. You should do that which is fiinancially best for you & your family.
You'll have to file as married, of course, which can be evidence for your I-751 filing if you need one.

I'll let the people who know more about taxes & student loans add their two cents. The student loan repayment plan may be based on household income, in which case I don't think it matters how you file your taxes. They want to know how much $$ the two of you have (independant of tax returns).

penguinbar

If you need an accountant who is very knowledgabel in both US and UK taxes I highly recommend Pete Newton. He is an expat who does my taxes as well as quite a few others on this forum. www.doug-tax.com

Moxie

After marriage, a couple can together file "married filing jointly" or each do their own "married filing separately" return. You can not file "single" anymore, and you will find the taxation is different when you change status. The choice is yours based on what works out best financially for you. Often people work out the two scenarios and see which one is best for them. Generally jointly works out best, but there are exceptions where separately may offer advantages.

Faye1

I appreciate your responses.

It looks like it would work out best if we file a married return separately as the benefits of the IBR (income based repayments) for my fiance's student loan will work out a lot less than the tax dollars we would save filing together.

Many thanks

Giantaxe

Unless your future husband's repayment plan forgives interest, it'll cost you a lot more in interest moving forward though. Of course, if you don't have the money to repay, minimizing repayments as opposed to minimizing overall interest paid is the only way to go.

Faye1

Its a tricky situation - The IBR programme does forgive interest for the first 3 years and then wipes out the entire balance of the loan and interest after 25 years of regular payments.

My fiance is still in the process of finishing his final masters project which means he is only working part time right now and under the IBR guidelines would qualify for minimum payments.

We need to decide whether he should only aim to pay the minimum amounts for the next 25 years which could have implications with our credit/buying a house etc or create a manageable payment plan between us to try and tackle the mounting debt - the most probable option.

Coming from the UK, the US student loans system seems completely unfair and almost criminal! Most of my US friends of my age (34) have shockingly huge loans which they are paying over 6% interest per year on

Moxie

In the same vein of thought from Meauxna, I looked it up briefly and it is based on household size and income. So no matter how you file taxes, if you get married then you and your income will count. Looks like not marrying is the option you need to be considering, not how to file taxes.

This is the random page I found by Google so I have about 2 minutes experience with student loans. http://www.ibrinfo.org/what.vp.html It's just something for you to further research because I'm no expert on IBR.

Giantaxe

As already pointed out, it looks like it's household income that counts, not just his income. In fact, I don't see anything that says it's spousal income so even living together rather than getting married might not help.

Like many things in the US student loans (especially those not guaranteed by the government) are a big business. Lobbying $$$s have ensured an unlevel playing field. There have been some minor improvements since the Bush era, but I agree the whole student loan area is essentially a disgrace.

Faye1

I was basing the information also on my limited knowledge from this website excerpt:

Marriage Penalty

The marriage penalty inherent in the IBR formula was corrected by Congress (P.L. 110-153, December 21, 2007) by allowing a married borrower who files income tax returns as "married filing separately" to count only the borrower's adjusted gross income and student loan debt. This lets a borrower exclude the (higher) income of his/her spouse when calculating the cap on monthly payments under income-based repayment instead of combining the income as under the original legislation.

http://www.finaid.org/loans/ibr.phtml

I will certainly research more though to make sure this would still be viable