Will My Inheritance Increase My IBR Student Loan Payment?

By on October 26, 2017

Question:

Dear Steve,

I have about $70,000 in student loans, currently on income based repayment and my payments are zero because of my current income. My mom has me as her sole inheritor. Her lawyer (who has since passed) told her the government won’t touch my inheritance when she dies. I think the exact opposite.

What are her options? I say change the will and leave me nothing. She doesn’t have much and it doesn’t need to repay my debt.

Amy

Answer:

Dear Amy,

I’m not an accountant and can’t give you tax advice but it seems there are some easy ways to deal with the situation. It really depends on how much of an inheritance you think you will receive.

For example, it would state in the will that the executor is instructed to disburse funds to your account with the lender.

If you got the inheritance you could always recertify your IBR with alternative documentation from the month you have to recertify.

These ways around the issue are gray for sure.

Or, you can always just receive the inheritance, report it as income on your tax return, and it will raise your AGI for the year. Your IBR payment is calculated off your tax return AGI. So for the next 12 months you’d pay a higher monthly payment until you recertify again and the payment goes back down.

The bottom line is there are multiple ways to deal with this situation.

morehelp1
Choice1 Choice3 Big Hug!
Euro-Video - , ,
If you have a credit or debt question you'd like to ask just use the online form .

READ  Is It Illegal For Me to Have to Pay More Than Half My Monthly Income to Student Loans? - Kandyce

Last step, fill out the information below or call us for Priority Assistance.

What problems are you having with your report?

Your first name is required. Your first name is required to be at least 2 characters. Your first name cannot be longer than 50 characters.
Your last name is required. Your last name is required to be at least 2 characters. Your last name cannot be longer than 50 characters.
Your email is required.
Your phone is required. Your 10 digit phone number is required.
Your state is required.
Your age is required. Your age must be greater than 18. Your age must be less than 100.

By clicking on the "Contact Me" button above, you consent, acknowledge, and agree to the following: Our Terms of Use and Privacy Policy and to receive electronic communications. We take your privacy seriously. That you are providing express "written" consent for Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS - charges may apply), even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list. Consent is not required as a condition to utilize Debt.com services and you are under no obligation to purchase anything.

By clicking on the “Contact me” button above, you consent, acknowledge, and agree to the following: (1)That you are providing express “written” consent for Lexington Law Firm, Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS – charges may apply), or dialed manually, at my residential or cellular number, even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list; and (2)Lexington Law’s and and Debt.com’s Terms of Use and Privacy Policy. Consent is not required as a condition to utilize Lexington Law or Debt.com services and you are under no obligation to purchase anything.

About Steve Rhode

Steve Rhode is the Euro-Video and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

4 Comments

  1. KENNETH T EMBRY

    October 27, 2017 at 1:12 am

    An inheritance is not “income” for tax purposes…It is similar to a gift and is notd reported on one’s personal income tax return,

    • Steve Rhode

      October 30, 2017 at 11:02 am

      • Dorothy

        November 1, 2017 at 4:00 pm

        Watch the video and read the text you’ve linked to. An inheritance is not income to the heir.

        The piece addresses estate tax — which the estate would pay and not the heir — but it sounds like Any’s Mom’ estate is well under the inheritance tax threshold.

  2. Amy

    October 26, 2017 at 5:31 pm

    Inheritance question asked.

Share a Comment / Leave a Reply

%d bloggers like this: