started repaying my loans $%%#$*#!!!

[Gasworks]

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actually its not that bad.. the breakdown is as follows:

federal loans.. consolidated @ 2.785% = $130,000
private loans avg interest rate @ 7% = $90,000

my total payments are around $2500 a month.. but now I'm told that interest payments no longer qualify as a tax writeoff.. can anyone confirm this for me??? Are people consolidating their private loans these days?? how much better than 7% can i do on these?

 

[Winged Scapula]

actually its not that bad.. the breakdown is as follows:

federal loans.. consolidated @ 2.785% = $130,000
private loans avg interest rate @ 7% = $90,000

my total payments are around $2500 a month.. but now I'm told that interest payments no longer qualify as a tax writeoff.. can anyone confirm this for me??? Are people consolidating their private loans these days?? how much better than 7% can i do on these?

I can tell you that my accountant told me this was true just yesterday; but on information overload, I don't remember the reason why.

 

[NinerNiner999]

Interest on student loans cannot be deducted if your adjusted gross income is above a certain limit (I think it is like $150k). This should be well below most physician's earnings...

 

[Winged Scapula]

Interest on student loans cannot be deducted if your adjusted gross income is above a certain limit (I think it is like $150k). This should be well below most physician's earnings...

Yep, that was the reason.

 

[group_theory]

You can either deduct the smaller of $2500 or the actual amount of interest you paid in the tax year. (figures is for 2006 tax year)

In addition, if your modified adjusted gross income is above a certain limit, your deduction is either phased out or you can't take any deduction

"The amount of your student loan interest deduction is phased out (gradually reduced) if your modified adjusted gross income (MAGI) is between $50,000 and $65,000 ($105,000 and $135,000 if you file a joint return). You cannot take a student loan interest deduction if your MAGI is $65,000 or more ($135,000 or more if you file a joint return). "


Source where I copied and pasted this information: http://www.irs.gov/publications/p970/ch04.html#d0e5023

 

[Gasworks]

if your modified adjusted gross income (MAGI) is between $50,000 and $65,000...

well i'm out of luck.. i make that about every 2 months.. lol..

 

[chicamedica]

nm wrong thread.

 

[DarksideAllstar]

well i'm out of luck.. i make that about every 2 months.. lol..

Hopefully this was tongue in cheek... if not, why do you care about making your measly $2500/mo payment?

 

[chocomorsel]

Actually if you read the first line of the post he states "it's not that bad". Doesn't sound like he's worried to me.

 

[mig26x]

I think someone wanted us to know how much she/he makes per year!!

 

[DarksideAllstar]

Actually if you read the first line of the post he states "it's not that bad". Doesn't sound like he's worried to me.

Gee, thanks for letting me know.

 

[mdjobexchange]

I haven't read the posted links in this thread, but I can easily see that you would not be able to claim the payments and/or the interest if you are done with training.

I am done with training, and once you make over about $150k, your deductions get mostly phased out. Some of this is from the normal tax code and some is from the AMT. Even if the regular tax code says you can deduct them, check with your accountant about the AMT. The AMT wipes out just about all deductions. My wife and I got bit by it this year. We bought a Prius, which qualified for a $3000 tax credit (not a deduction) and because of the AMT, it got negated. Poof....$3000 vanished because of the AMT.

When I finished residency, I took a high-paying anesthesia job in Reno, NV, lived in a decent apartment and paid off my $65,000 of debt in less than a year. Admittedly, I had no dependents, but it was very satisfying to be free. Your debt is much higher, but, if you could at least cut it in half, you would be paying much less in interest.

Don't buy into the saying that "There is good debt and bad debt." There is only Bad Debt and Worse Debt.

 

[AmoryBlaine]

I haven't read the posted links in this thread, but I can easily see that you would not be able to claim the payments and/or the interest if you are done with training.

I am done with training, and once you make over about $150k, your deductions get mostly phased out. Some of this is from the normal tax code and some is from the AMT. Even if the regular tax code says you can deduct them, check with your accountant about the AMT. The AMT wipes out just about all deductions. My wife and I got bit by it this year. We bought a Prius, which qualified for a $3000 tax credit (not a deduction) and because of the AMT, it got negated. Poof....$3000 vanished because of the AMT.

When I finished residency, I took a high-paying anesthesia job in Reno, NV, lived in a decent apartment and paid off my $65,000 of debt in less than a year. Admittedly, I had no dependents, but it was very satisfying to be free. Your debt is much higher, but, if you could at least cut it in half, you would be paying much less in interest.

Don't buy into the saying that "There is good debt and bad debt." There is only Bad Debt and Worse Debt.

I'm not disagreeing with you, but you do have to admit that a loan @ 2.7% that bought you an MD degree is not exactly the worst debt in the world...

 

[McGillGrad]

I'm not disagreeing with you, but you do have to admit that a loan @ 2.7% that bought you an MD degree is not exactly the worst debt in the world...

At 2-3%, it is absolutely good debt because, as a former financial analyst, you are wasting money by paying off this debt as opposed to taking the same money and investing it in any fixed income return. When you see a 5% bonus on this money (at an average of 8% return), it makes a lot of sense.

But anything above 3% should just be paid off as quickly as you possible.