Recertify PSLF before paying taxes?

[trickofthetail]

Hi friends,

I have a colleague in the PSLF program who was a fellow last year (2018 AGI 65k) and an attending this year (2019 AGI more than 65K). He or she has not yet filed 2019 taxes, but got a letter from Fedloan saying the annual employer recertification is due 6/27/2020. In years past this has been done online using the IRS link to automatically gather their AGI and calculate the monthly payment (PAYE in this case).

Can this person hypothetically speaking recertify now using the 2018 data to calculate the next year's loan payment, and pay taxes after?

Stated differently, is there any requirement to recertify his/her employment mid-cycle for example, a massive change in income? Or a move from one 501c3 to another?

Thank you for the information and advice!

[Ekanive23]

I think the wording on the question is now... has your income decreased recently? It used to be has it changed. So I do not think there is an obligation to notify them of pay increases anymore.

i do not know the answer to your question. I’m. Pgy3 using 2018 return and paying 27 a month. Next year using 2019 it’ll be based off 110 k ( moonlighting and sign on bonus), year after that about 170 (half year attending/half year fellow) and then full price

[NumbNumb]

If they have already used to calculate his payments, most likely they would want an updated tax year. But with the bureaucracy and lapses in any governmental agency, possible he might be able to slip it past them.
I won't recommend for PSLF since even after 120 payments, they might use that against you for denial

[jhwkr542]

They won't process it until then even if your friend does recertify their income. I think it's worth doing though now. It'll be interesting to see how FedLoan handles this since they haven't given any guidance that I'm aware of.

[East coast]

Hi friends,

I have a colleague in the PSLF program who was a fellow last year (2018 AGI 65k) and an attending this year (2019 AGI more than 65K). He or she has not yet filed 2019 taxes, but got a letter from Fedloan saying the annual employer recertification is due 6/27/2020. In years past this has been done online using the IRS link to automatically gather their AGI and calculate the monthly payment (PAYE in this case).

Can this person hypothetically speaking recertify now using the 2018 data to calculate the next year's loan payment, and pay taxes after?

Stated differently, is there any requirement to recertify his/her employment mid-cycle for example, a massive change in income? Or a move from one 501c3 to another?

Thank you for the information and advice!

The re certification form simply asks for the "last federal income tax return filed" (assuming you've filed in the last two years) - there is no requirement that verifying forms used in recertification be less than 12 months recent. Yes, you can technically recertify twice on one tax filing. I think that'll actually happen a fair amount this year given the unique circumstances. I've done it on ours though under different circumstances (switching IDR plans). What's funny is that I was given a lower minimum payment the 2nd time I recertified things on the same exact tax filing - we had a few situational changes (marriage), but that shouldn't have changed anything, so I can't explain it, but our payment went from $400-ish/month to $375/month.

There is no requirement to recertify with a massive change in income midcycle, but you can if your income decreases. I don't think moving from a 501c3 to another would spark anything unique that would cause someone to recertify (unless income decreases), though you definitely should be doing multiple employment certifications.

[Tim]

Not slamming anyone. Nothing wrong with someone making “good faith” efforts to claim benefits and minimize payments.

Is it reasonable to ask the question “What should you do?”
Different question than “How can I game the process since all the tax deadlines have been changed.?”

[East coast]

There is zero question of what 'good faith' constitutes in this situation. The form literally says that you use the most recent tax filing over the course of the last two years. In other words, it literally states that this is okay - that's quite different than a whole sale 'reinterpretation' of a term or other legal language (in comparison to the case of the backdoor roth before the clarification/guidance that the IRS came out with a year or two ago - that one definitely could be, and was, argued as a non-good faith interpretation, though I did them anyways during those years).

I've said it a few times around here that a lot of the push back to advice given on PSLF is due to legit lack of understanding of the program and it's intricate rules - To insinuate that what is suggested above is not in 'good faith' is simply not supported by facts. The gov't decided to move tax filing date back to July. There are 2nd and 3rd order consequences of that and this could likely be framed as one of those.

[Tim]

East coast
I guess you think they needed to revise the form with all the covid crisis. Zero question?
What should you do, involves zero reinterpretation of legalese.
Just a question. Right or wrong, good or bad. Well, sorry you take offense. It wasn’t personal. I don’t care, yes. Rationalization is that taxes can be extended anyways. There is a reason for the two years. Manipulating a program is manipulating.
No illegal. Manipulated justifiable flexibility that is sometimes needed is a character question. That’s not a legal interpretation. Merely opinion, intentionally structuring the paper work for personal benefit. I did say that is acceptable.
Merely questionable. I question the “good faith” intent. Someone will pay it.