Two Tax Decisions That Could Save Your Thousands in Student Loan Payments
Happy Monday!
As we head toward the April tax filing deadline, I want to talk about something that doesn't get enough attention: your tax return is one of the most powerful tools you have for student loan planning.
If you're using income-driven repayment plans toward forgiveness, income is the biggest lever you have to plan around - and your tax return is the default way that income gets reported to the Department of Education.
There are two decisions worth thinking carefully about right now if you haven't filed yet.
1. Should you wait to file your 2025 return?
Here's a detail many ODs miss: your student loan payments are based by default on your most recently filed tax return. Not the most recent tax year — the most recently filed return.
Yes, you can submit an alternative documentation of income such as paystubs if your income declined since you last filed taxes, but that's the starting point.
That means if you haven't filed your 2025 return yet, your most recently filed return is still 2024.
So if your 2024 income (AGI, line 11) was meaningfully lower than what 2025's will be - maybe you bought into a practice, had a strong production year, got married, or saw a big income jump - you may be able to recertify your income using 2024's lower numbers before filing 2025.
What if your recertification date is after the April 15th deadline? Work with your tax professional to file an extension for your 2025 return - you can delay filing your return until October 15th at the latest.
Remember, an extension delays when you file, not when you pay. It buys you time to recertify using last year's lower AGI, which can mean another 12 months of lower student loan payments. But you still need to make a payment for expected taxes due by the April deadline.
Once you've completed the IDR recertification and the recertification date has passed, you can file the 2025 tax return.
For those of you who take pride in filing early and getting it done - I get it. But sometimes the best planning move is not filing right away.
2. Should you file jointly or separately?
For married optometrists on IDR plans, this is one of the most impactful decisions you'll make each year.
Filing jointly means your student loan calculation uses the full combined household income. There's no way around it.
If you both have federal loans, then your "household" payment is split between the two of you depending on the amount of debt each spouse has. But if you're the only borrower, then both incomes impact your loan payments.
Filing separately allows you to exclude your spouse's income from the student loan calculation. But it does come with added tax costs - smaller tax brackets for the higher earner, lost credits and deductions, and other trade-offs you need to weigh.
The general framework: if the student loan savings outweigh the added tax costs, filing separately may make sense.
And if you're in a community property state, the opportunity gets even bigger.
In community property states (California, Texas, Arizona, Washington, Nevada, Idaho, Louisiana, New Mexico, Wisconsin — plus Alaska as an opt-in state), filing separately splits your "community" household income 50/50 between spouses for both tax and student loan purposes.
Here's a hypothetical example to show the impact:
A practice owner earns $300,000 and is the sole breadwinner of the family. Student loans are around $280,000. No kids just yet. On paper, forgiveness looks like a non-starter - income is higher than the debt.
But file separately in a community property state, and that income drops to $150,000 for student loan purposes. The monthly IBR payment can go from roughly $3,000 to about $1,500 - a savings of over $16,000 per year. That's before any additional tax planning.
That kind of difference can completely change whether forgiveness makes sense long-term.
This is a hypothetical example for illustrative purposes only. Your results will depend on your specific situation.
I've worked with plenty of optometrists - including high-earning practice owners - who assumed they earned too much for forgiveness to be worthwhile. Once you factor in filing status, community property rules, and pre-tax retirement contributions, the math often tells a very different story.
Two important things to know about timing:
✅ If you file jointly and the April deadline passes, you cannot amend back to separate returns. You're locked in for the year. If you're unsure, consider filing an extension to give yourself time to decide. If you've already filed jointly and should have filed separate returns, talk with your tax pro about filing "superseding" separate tax returns before the April deadline.
✅ If you file separately first, you can amend back to joint later - so separate is the more flexible starting point.
The bottom line
Tax planning and student loan planning go hand in hand. Your filing status and the timing of when you file can have a massive impact on your student loan payments - and on whether forgiveness even makes sense for your situation.
These aren't decisions to make in a vacuum. They require looking at the full picture: your income, your spouse's income, your loan balance, your repayment timeline, your tax situation, and how it all fits together.
If you're not sure where you stand, let's talk. I help optometrists all over the country navigate exactly this kind of planning - where student loans, taxes, and the bigger financial picture all intersect. And I help communicate closely with your tax professional to make sure everyone's on the same page.
Click here to schedule your free consultation. We can look at what's on your mind and figure out if there's a better path forward for your situation.
Have a great week!
Evon Mendrin, CFP®, CSLP®
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