Questions re: filing US taxes/student loan

Hello, friends!

My wife is an American and has been living with me in Wales since April 11, 2015. This was her first year having to file her American taxes from abroad. She always filed her taxes on her own in America and thought that it would be the same process filing from here. She filed her taxes for her first year here using the taxact website and answered all of the questions that were asked with honesty, but after reading some other posts on UK Yankee she fears that she may have made some mistakes. She usually e-files, but since she was filing from the UK she had to mail them in.

She read that she was supposed to include her income from the UK, but the tax forms never asked anything about that. She is afraid that she may have missed something and has done them incorrectly. Who do we contact or what can we do to correct this? We don't want any issues with the IRS. Would we be notified if we did something wrong?

Also, when she first came over, she couldn't work because she didn't have a national insurance number so her student loan payments had been put on hold. When she got a job, she consolidated her loans to one company (NELNET), and called them to talk about how to repay the loans. She was actually told by the company that she should apply for an income based payment plan, because since she had $0 of US income her payments would be $0 per month and after 20 years, the loans would be written off. She specifically asked if it mattered that she had a job in the UK and they told her it didn't matter because it wasn't American income. But, she later read on UK Yankee that someone thought that was false information.

Also, we were wondering... If we bought a house in America and rented it out, I assume it would be considered an American income? We want to do everything the right way, but we are finding a lot of conflicting information.  Would having the house in my name as opposed to my wife’s remedy this?

Thank you so much for all of your help. We truly appreciate it!

The tax system of the United States is the simplest in the universe; worldwide on everything, forever.  Your wife is required to declare worldwide income and gains. If her US return was incorrect it would be sensible to amend it.

Why would you - as an NRA - want to own US real property, compared with your wife?

Also, when she first came over, she couldn't work because she didn't have a national insurance number so her student loan payments had been put on hold. When she got a job, she consolidated her loans to one company (NELNET), and called them to talk about how to repay the loans. She was actually told by the company that she should apply for an income based payment plan, because since she had $0 of US income her payments would be $0 per month and after 20 years, the loans would be written off. She specifically asked if it mattered that she had a job in the UK and they told her it didn't matter because it wasn't American income. But, she later read on UK Yankee that someone thought that was false information.

Hey,

My student loans have been with Nelnet since I graduated 8 years ago. I'm not sure where your wife got that information, but it is definitely not correct. 

The Income Based Repayment plan is something you have to send in paperwork every year to see what your IBR amount will be, they don't base it off of a one time thing. They do count international income. Heck, I was even told when I called them before I moved here in 2014 that I could pay in GBP from a UK bank account if I wanted to. I verified that after I moved.

Either she was given incorrect information by someone or she misunderstood the information she was given. I would have her give them a call. Yes, the remainder of the loan will be forgiven after 20 or 25 years depending on what she decided to do when she signed up.

Depending on when she put in for Income Based Repayment, I'm sure she will needing to send in the form (it's the same one she used when she originally applied for IBR) and her 3 months of paystubs for her next year's IBR payments. 

Cheers!

The tax system of the United States is the simplest in the universe; worldwide on everything, forever.  Your wife is required to declare worldwide income and gains. If her US return was incorrect it would be sensible to amend it.

Why would you - as an NRA - want to own US real property, compared with your wife?

Thanks, I will pass on this information.

The whole idea with me owning the property as opposed to my wife was that it would be under my name and resultantly the income we generate from renting it out would not be applicable to her tax return, which we were thinking would have been relevant given her income based student loan.

Hey,

My student loans have been with Nelnet since I graduated 8 years ago. I'm not sure where your wife got that information, but it is definitely not correct. 

The Income Based Repayment plan is something you have to send in paperwork every year to see what your IBR amount will be, they don't base it off of a one time thing. They do count international income. Heck, I was even told when I called them before I moved here in 2014 that I could pay in GBP from a UK bank account if I wanted to. I verified that after I moved.

Either she was given incorrect information by someone or she misunderstood the information she was given. I would have her give them a call. Yes, the remainder of the loan will be forgiven after 20 or 25 years depending on what she decided to do when she signed up.

Depending on when she put in for Income Based Repayment, I'm sure she will needing to send in the form (it's the same one she used when she originally applied for IBR) and her 3 months of paystubs for her next year's IBR payments. 

Cheers!

Thank you very much for the detailed response.  This is all very peculiar, I was sat with her as she was on the phone to Nelnet and can vouch that this was the information that was given to her (filing a tax return in the US I have no clue about, but this I was there for).

The guy on the phone was stating that he had done this exact same thing with another American ex-pat living in Britain recently.  He genuinely told us that as we won't have a taxable US income unless she earns a considerably high amount, her payment based on the IBR plan would be $0.  This is so frustrating!!!

She didn't fill in a form and send it off (she may have filled something in online whilst speaking to the guy however, I can't remember definitively in honesty).  They did mention it would be forgiven after either 20 or 25 years... I can't remember which it was.

What a bloody mess.

Thank you very much for the detailed response.  This is all very peculiar, I was sat with her as she was on the phone to Nelnet and can vouch that this was the information that was given to her (filing a tax return in the US I have no clue about, but this I was there for).

The guy on the phone was stating that he had done this exact same thing with another American ex-pat living in Britain recently.  He genuinely told us that as we won't have a taxable US income unless she earns a considerably high amount, her payment based on the IBR plan would be $0.  This is so frustrating!!!

She didn't fill in a form and send it off (she may have filled something in online whilst speaking to the guy however, I can't remember definitively in honesty).  They did mention it would be forgiven after either 20 or 25 years... I can't remember which it was.

What a bloody mess.

There is an online form you can fill out for it rather than filling out the paper one, but it requires you to use your last tax return. Depending on what she was earning the previous year, is how likely she was to get a low payment. Unless that has changed, since I last checked the online form.

Has she had her loans deferred for a year instead?

You can't get the IBR repayment without filling in the form either online or by hand and scanning & emailing/posting it to them. They have to have the paperwork and it has to be done every year on the anniversary of when you applied for IBR. They send you reminders two months before you have to fill out the form. I was getting mine in November for January.

And, apparently, I was wrong. This is the most amazingly awesome thing I have ever heard in my life. I am so unbelievable sorry for worrying you. sh*t. More people need to know this!


I sent you a PM as I assumed you'd check your email before you'd check here.

Damn. That is friggin amazing.

There is an online form you can fill out for it rather than filling out the paper one, but it requires you to use your last tax return. Depending on what she was earning the previous year, is how likely she was to get a low payment. Unless that has changed, since I last checked the online form.

Has she had her loans deferred for a year instead?

You can't get the IBR repayment without filling in the form either online or by hand and scanning & emailing/posting it to them. They have to have the paperwork and it has to be done every year on the anniversary of when you applied for IBR. They send you reminders two months before you have to fill out the form. I was getting mine in November for January.

And, apparently, I was wrong. This is the most amazingly awesome thing I have ever heard in my life. I am so unbelievable sorry for worrying you. shoot. More people need to know this!


I sent you a PM as I assumed you'd check your email before you'd check here.

Damn. That is friggin amazing.

Research it yourself Lyonaria, as that's not an official source.  If this was true, THOUSANDS of people are unnecessarily paying loans.  If it sounds too good to be true, it usually is.

If I understand correctly, technically you can get by paying $0 on IBR since you don't pay US income tax, but what's left after 20-25 years that gets forgiven counts as taxable income, which by then could be quite a considerable amount, so they still get you.  Don't quote me on this, I believe this is correct.

However I would like to know more about being able to pay Nelnet through a UK bank account.  I keep transferring money to my US account to pay my loans and the fees are awful.  I'm not on any income based plan at the moment as my income isn't consistent, but I'm hoping I'll have a permanent job soon and will switch to PAYE (or IBR, not sure which is better...?).

You're right about it counting as taxable income btw. I had just started a new job when I applied for IBR so I used my job contract as proof of my income. My payments are $0 right now because I don't have enough disposable income to be required to make actual payments, though I plan on paying as much as I can afford.


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Research it yourself Lyonaria, as that's not an official source.  If this was true, THOUSANDS of people are unnecessarily paying loans.  If it sounds too good to be true, it usually is.

I called them myself. Technically, it is true.

Because our AGI is $0 US dollars, you can get by on not paying anything. But the info from alisonr, is also true. So if you don't want to get a tax hit in the year that your loans are forgiven. Don't do that!

For the moment, a $0 payment is helpful for me. I'll keep making payments anyway to help lower it, and hopefully get on the right track next year. Damn, I thought I would have the career thing on lock by now. *sigh*

I called them myself. Technically, it is true.

Because our AGI is $0 US dollars, you can get by on not paying anything. But the info from alisonr, is also true. So if you don't want to get a tax hit in the year that your loans are forgiven. Don't do that!

For the moment, a $0 payment is helpful for me. I'll keep making payments anyway to help lower it, and hopefully get on the right track next year. Damn, I thought I would have the career thing on lock by now. *sigh*

I generally try to avoid thinking about it. My heart rate is elevated just reading this thread. TBH it's the tax bill that's terrifying to me. Though I do know the IRS will do payment plans, I'm sure they won't be as nice as IBR.


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I generally try to avoid thinking about it. My heart rate is elevated just reading this thread. TBH it's the tax bill that's terrifying to me. Though I do know the IRS will do payment plans, I'm sure they won't be as nice as IBR.


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What tax bill do you mean alisonr? Feel free not to answer if it's too stressful.

What tax bill do you mean alisonr? Feel free not to answer if it's too stressful.

Oh just the inevitable one at the end of my repayment period (20 years away). I've got law school debt galore and a terrible interest rate.

Im planning on being very aggressive with repayment, regardless of what IBR requires, but I'm just stuck with lower wages at the moment since I took a pretty big starting pay cut by moving over here. I know I'll get there eventually, just hard to see it on this side of the 20 years.


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However I would like to know more about being able to pay Nelnet through a UK bank account.  I keep transferring money to my US account to pay my loans and the fees are awful.  I'm not on any income based plan at the moment as my income isn't consistent, but I'm hoping I'll have a permanent job soon and will switch to PAYE (or IBR, not sure which is better...?).

I was told I could set up the account online just like a US bank account. Now I haven't actually done anything with this as I've just been using Paypal to transfer money from the US to the UK. Which now worries me that maybe this is seen as taxable income?!

Oh just the inevitable one at the end of my repayment period (20 years away). I've got law school debt galore and a terrible interest rate.

Im planning on being very aggressive with repayment, regardless of what IBR requires, but I'm just stuck with lower wages at the moment since I took a pretty big starting pay cut by moving over here. I know I'll get there eventually, just hard to see it on this side of the 20 years.


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You can do it!  The day I paid off my loans was the BEST DAY!