Income Driven Repayment Question

[LearningMustachian72]

I have been contributing heavily to my 403b and 457 to lower my AGI. I am married but file separately and do not share finances with my spouse.

When I went to recalculate my payments in the PAYE program, there are two options.

1. Enter wage information manually. 
- I always thought this was AGI but when I get through to the screen it says gross income (before taxes and deductions). Does this then not take into consideration any 403b/457 contributions?

2.  Import taxes directly by connecting to IRS. Will this base my payments on AGI or gross income as in the option above?  Always thought was AGI but option 1 on the site clearly says gross income.  Also, will this incorporate spouse income at all?

Thanks in advance.

[PMG]

Check their website.

“Monthly Payment Amount

Our Income-Driven Plans page has basic information about how monthly payment amounts are calculated under the different income-driven repayment plans. You can also use Loan Simulator to compare estimated monthly payment amounts for all federal student loan repayment plans.

How is the monthly payment amount calculated under the REPAYE, PAYE, and IBR plans?

Under these plans, your required monthly payment is generally a percentage of your discretionary income. For all three plans, your discretionary income is the difference between your adjusted gross income (AGI) and 150 percent of the U.S. Department of Health and Human Services (HHS) Poverty Guideline amount for your family size and state.”

Source: https://studentaid.gov/manage-loans/repayment/plans/income-driven/questions

[lifeisshort123]

It is based on your AGI.  I don’t know how it works when you “immediately re-certify” in the case of a job loss, etc, and what the penalty is if your numbers do not align with future tax returns.

[Effervescent]

IDR certification is based on adjusted gross income if you certify your income through tax returns. So if you make $50,000/year but contribute $6,000 to a traditional IRA, your IDR would be based on your adjusted gross income of $44,000.

Regarding the other option, it seems open to interpretation but if ultimately your AGI is going to be lower because of your 403b and 457b contributions, then you might indicate that your income is whatever your gross is each paycheck minus your 403b and 457b contributions, deducted directly from your paycheck (x 26 if you're paid biweekly).

[lifeisshort123]

Here is an article from nerdwallet
https://www.nerdwallet.com/article/loans/student-loans/recertify-income-based-repayment

It says that for now you can also do a “self-certify”.  What I am curious is what the repercussions are and how they are noticed when someone “self-certifies” or immediately re-certifies an income that is significantly higher or lower than what they list.  Are they backbilled or refunded?