This morning, U.S. Treasury Secretary Steven Mnuchin announced via Twitter: “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15.

All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

We expect the IRS will issue official guidance today or Monday, officially extending the deadline.
Previously announced – individuals and small businesses can also delay paying any federal income tax payments up to $1 million and $10 million, respectively, until July 15, 2020.

Mileage log app for iPhone, iPad and Android

Several clients have requested my recommendation for an application to track their business mileage, since I am always nagging them to keep a log. After researching the market I believe that TripLog by eSocial LLC provides the functionality and ease of use that small business users will desire.  The free version should be all that is necessary for most single users, but if  needed, increased report-generating capability is available for a monthly fee.

Here are the details: 

Track your vehicle mileage with GPS mobile log app for iPhone, iPad and Android with TripLog

With most innovative and advanced features, TripLog makes the mileage tracking a breeze.

It automates mileage tracking with GPS and power source. Monitor trips with Android widgets.

Plus vehicle and business expenses tracking, fuel economy calculation, and comprehensive IRS compliant reports.

Integrate with Intuit QuickBooks


  • The ONLY app that Auto Starts when plug in to power and drive more than 5 mph
  • The only mileage tracking app reads vehicle odometer from OBD-II devices
  • Sync and merge data to TripLog Web Service from multiple devices (optional)
  • Most comprehensive reports compliant to IRS TAX returns
  • Upload backup data and receipt photos to Cloud
  • Trucker support with IFTA fuel tax report

GPS Tracking & Auto Start

  • Use GPS to track mileage, record actual driving route and show on Maps.
  • AUTO START when plugged in to power and drive more than 5 mph, or by set timeframe. Auto stop when vehicle stops and disconnected.
  • Find street address by latitude/longitude.
  • Query online map services for suggested driving distance and time. Show locations and directions on map.
  • Import location name and address from phone Contacts.
  • Mark location as tollbooth and automatically apply tolls to trips that pass through the tollbooth
  • Backup/restore data through device and cloud storage. Transfer data to other mobile devices.
  • Support multiple vehicles, multiple tax categories (business, medical, charity, etc.) and multiple business entities.
  • Customize mile or kilometre, gallon or litre, 16 currency symbols, and 7 date formats.

Comprehensive IRS compliant Reports

  • IRS compliant tax return HTML and CSV reports with built-in IRS 2012, 2013, 2014 mileage rates.
  • Take receipt photos and upload to cloud storage. Photos are available to download in HTML reports.
  • Turn regular expenses into scheduled reminders with time and mileage intervals.
  • Commercial truck support (scale, lumpers, and per diem allowance, and state-by-state mileage for IFTA fuel tax report).
  • Calculate fuel economy (MPG, L/100km, or KM/L).
  • Sync data between web service and multiple mobile devices.
  • Record actual driving route and show on maps

Download TripLog – GPS Mileage Tracker for FREE 

We’ve Moved!

We have moved to 111 Triad Center West, O’Fallon, Mo. 63366.  

We are working to organize and install our systems.  A letter will be mailed to all clients as soon as we are up and running.

NEW OFFICE – 111 Triad Center West, O’Fallon, Mo. 63366

Phyllis and Evelyn

The Affordable Care Act: Attainable Coverage for Small Businesses

Under the Affordable Care Act, small employers will have more options than ever when it comes to health insurance.

The Affordable Care Act: Attainable Coverage for Small Businesses

By SBA Region 7 Administrator Patricia Brown-Dixon

America’s 28 million small businesses are the backbone of our economy, creating two out of every three net new jobs and employing half of America’s workforce. From mom-and-pop stores and restaurants, to high-tech startups and productive manufacturers, 115,038 small businesses are helping to drive Missouri’s economy and create jobs in our local communities.
Many small business owners consider their employees to be part of their family, and providing benefits such as health care is one important tool they have to help retain their talented workforce and compete for skilled employees.  But even though many businesses want to offer their workers health insurance, in the past they have often been unable to afford it, for reasons like steadily climbing rate increases and limited coverage.

The U.S. Small Business Administration (SBA) is committed to giving small business owners the resources they need to start and grow a business– including access to critical information about how the Affordable Care Act is opening up better health care options for small business owners and entrepreneurs.

Under the Affordable Care Act, small employers will have more options than ever when it comes to health insurance.  As these provisions continue to go into effect in the next several years, it’s important for small business owners to stay informed about what they need to do to comply with and take advantage of the Affordable Care Act.

First, starting January 1st, 2014, small businesses with generally up to 50 full-time equivalent employees will be able to purchase health insurance through the online health insurance marketplace for small businesses, known as SHOP.

The SHOP Marketplace will offer employers a choice of qualified health plans from different private health insurers and make it easier for employers to make side-by-side comparisons between these plans, based on price and benefits.

SHOP also offers employers and their employees access to health insurance plans that must include a package of “Essential Health Benefits” like coverage for doctor visits, preventive care, hospitalization and prescriptions.  Many small employers may be eligible for tax credits of up to 50% of their premium costs if they choose to purchase coverage through SHOP.

Enrollment in the federal SHOP marketplace, operated by the U.S. Department of Health and Human Services, starts on October 1st for coverage beginning January 1, 2014.Information on how the law affects your business, and instructions on how to preview the health insurance policy offerings in SHOP when they are ready on Oct. 1, are available via a new, streamlined web tool for businesses housed at

The Affordable Care Act calls on all employers that are covered by the Fair Labor Standards Act (generally, those firms that have at least one employee and at least $500,000 in annual dollar volume of business), to notify their employees about the coverage options available to them through the health care Marketplace, whether or not the employer currently offers health coverage.  Employers are required to  provide this notice to all current full-time and part-time employees by October 1, 2013, as well as all new employees at the time of hire beginning October 1st.

The Affordable Care Act allows small employers to offer health coverage in a way that makes sense for their business and works for their bottom line, and the SBA is committed to leveraging our resources and federal partnerships to connect you with the facts and resources you need to understand the law.

To learn more, contact the SBA St. Louis District Office at 314-539-6600 or visit the website at

Performing Artists, Film Production, and entertainment industry tax return issues

Tax Information and Issues for Actors and others in the entertainment industry        

Actors, singers, dancers and other performers in the entertainment industry face many challenges when trying to prepare their tax returns and what qualifies as a deduction. There are many common mistakes actors make when it comes to appropriate tax write offs. Following are general guidelines, but always check with a certified tax preparer because tax codes change frequently. Don’t make the mistake of listening to your fellow actors on what you can write off. Unfortunately, the Internal Revenue Service might have a differing opinion–and that opinion prevails at audit time. The reason to keep good records and receipts is in case you are audited you are fully prepared with everything you need to fight for your deductions. Also, keeping good records does a whole lot more for you in an IRS audit: It validates the time, effort, energy and money you put into your career. Auditors tend to think that performing artists will be scattered and unorganized, and when you come in like an efficient business person, their attitude towards you changes in a positive manner. It is vitally important to keep excellent tax records and do it on a regular basis. This means keeping every receipt you plan on deducting. The reason is, if you are ever audited the absence of records and receipts could potentially cost you thousands of dollars. But, a bigger reason is, that if you do not keep good records, you are very likely to cheat yourself out of income from deductions you could rightfully claim. The most important thing for you to do is keep track of your income and expenses; you can always hire someone to professionally prepare your tax forms. But, good tax preparation and recordkeeping  is crucial. Even the best tax professionals cannot save you money or keep you out of trouble if you don’t have good records. Make it a habit of having your records well organized with your receipts and ledgers easily accessible. Create a ledger on your computer as well as keeping a hard copy as a backup. It must show the date of the purchase, the purchase amount, and the business purpose. A business log can be a record of your choosing. There are record-keeping systems which are designed just for actors. Or, you can make notes in your daybook, calendar, and notebook – whatever works best for you. Go to an office supply store and buy a large accordion-style file box with as many individual slots you will need. Then label the slots by categories listed below under deductible expenses. On a weekly or monthly basis list your expenses in your ledger and put the written receipts into the appropriate slots. If you are using credit cards, it is a good idea to use one credit card for business use only, so that everything charged to it is business-related. Don’t forget to write purchase details on the back of the credit card slips. You are the CEO of your business and that includes being in charge of the “Accounting Department.” Stay on top of your tax records and remember show business is two words. Being a great business person will help you get the most out of your deductions and be prepared in case you are audited by Uncle Sam.

Independent Contractor vs. Employee

1099MISC   Independent contractors get paid by cash or check with no withholding of any kind. This means that you are responsible for all of the Social Security and Medicare normally paid or withheld by your employer.    Independent contractors will file a “Schedule C” as part of their regular 1040 income tax form (this is where you report all the 1099’s you received last year). The performer may also file form 8829 for the home office deduction and will be required to pay self-employment tax (Schedule SE) on their net income (profit) as well as federal income tax. All these forms are part of the year-end 1040 income tax filing. The self-employed performer will also usually be required to pay estimated quarterly taxes on Form 1040-ES (if the tax liability is to exceed $1,000). The performer may also have W-2 income from union jobs where taxes are taken out of your paycheck. On W-2’s you might often have extensive expenses that will be deducted on Federal Form 2106. This means that a performer with BOTH W-2 and self-employment income will have to separate or allocate expenses between the two types of income:     Wage Employment    and    Self-employment


**Expenses of Certain Performing Artists
If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. To qualify, you must meet all of the following requirements.
1.       During the tax year, you perform services in the performing arts as an employee for at least two employers.
2.       You receive at least $200 each from any two of these employers.
3.       Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services.
4.       Your adjusted gross income is not more than $16,000 before deducting these business expenses.
Special rules for married persons. If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. However, requirement (4) applies to your and your spouse’s combined adjusted gross income.

Common Questions

Is my clothing tax-deductible?

This is one of the first things an IRS auditor will look at and might draw attention to possible other deduction mistakes. The Internal Revenue Code states, “Clothing is considered to be a personal expenditure if it is suitable for street wear.” Even though you have purchased clothing for audition purposes only if you can wear it any other time then it is not deductible. Wardrobe deductions are largely limited to true costumes: a police officer’s uniform, surgical scrubs, a clown outfit, historical period pieces, etc. Formal wear, for both sexes, is also generally deductible. If you purchase such an outfit take a digital photo of it to document its character and keep the receipt. However, you can deduct the cost of dry cleaning or repairs to clothing you wear to an audition or a performance.

Are business gifts deductible?

You can deduct business gifts in the amount of $25.00 per person, per year. The law does not limit, of course, the amount of the gift–but only the first $25.00 for each person is deductible. On your receipt make note including date of purchase, item description, name of the person receiving the gift and the business relationship/reason. Don’t forget your agent who works very hard for you and loves to receive gifts!

What meals can I deduct?

Personal business meals which do not involve other people are only deductible when overnight travel is involved, or if you must travel to a different metropolitan area even if you do not stay overnight. If you go from Orlando to Oviedo you cannot deduct your meal. But, if you went from Orlando to Tampa then you can. However, business meals, where you pay for someone else’s meal are deductible. Here are some of the reasons on deducting business meals. You must have a receipt showing date and time, who was present, amount of the bill and business purpose. Business MUST be discussed at the meal–not before or after. In addition, the meal must take place in an atmosphere conductive to business–any restaurant or even a night club will suffice. And the expenditure must not be “lavish.”

Meals when a group of actors get together and discuss career paths, agents, etc. are far less clear cut. All business expenditures have to meet the test of being ordinary and necessary, and the tax courts have ruled that business meals shared by colleagues are not necessary. This becomes particularly true if the meeting is regular, and people take turns paying. Limit such “colleague” meals, and always explicitly note the business purpose on the receipt. Remember that only 50% of all meals are deductible.

Can I deduct my gym membership?

Body image is an important and integral part of an a performers image, and staying in good shape is important to a career in the performing arts. Most gym and workout costs are considered to be personal expenditures, and therefore are NOT deductible. In case of a special circumstance where it is required for you to “buff up” for a project and the producers do not pay for this cost then you can deduct the fees paid to a gym and/or personal trainer.

What personal grooming costs are deductible?

Everyday cost for makeup and routine haircuts and/or or color are personal expenses and are not deductible. If you have to change your hair cut and/or color for a specific audition or role then the costs relating to a specific incident is deductible. Theatrical makeup is deductible, because it is not normally used as street wear. If you pay a makeup artist for a headshot session or an audition, that specific set of costs is deductible. Manicures and pedicures are not deductible unless you are a hand model or a foot model with a specific audition or booking that would qualify as a deduction.

Can I deduct admission to movies and plays?

This can be a gray area to the IRS so it is extremely important to keep good records. Always keep a written receipt and/or ticket stubs. Staple them to a sheet of paper, and next to the ticket, put a solid business reason why you saw that particular movie such as observing the director’s dialogue technique or researching current trends. The IRS is not keen on allowing movie or theatre admissions as a deduction, but with good records and good reasons, they will. You need proof you are going to see movies and theater as part of your job and not entertainment. They also are not fond of cable and satellite costs too –but you can argue for taking the deduction. Don’t claim your full bill as a business expense. Take a reasonable percentage as business and the balance as personal. Much more than 50% tends to make auditors not agree with your reason on why you deserve the deduction.

What are allowable mileage and transportation deductions?

Your car is a major source of expense as well as a major source of tax deductions and is probably one of the most common deductions for performers.  You do not have to have receipts for mileage, but you must have good records.  This means keeping a mileage log. Thanks to technology you can download an App* to keep track of your mileage. By keeping a log it will dramatically increase your possible deductions, because you won’t overlook miles driven for business – and you will have the necessary records if you are required to produce them.  You cannot deduct personal miles such as driving back and forth to your day job.  But, going from your day job to an audition is.  Any trip you take to pursue work should be deductible.  This includes auditions, call-backs, casting visits, trips to acting classes, appointments to see agents and managers, to the post office to mail submissions, etc.

Also keep a record of your total mileage for the year. Make an odometer note on January 1 and again on December 31st.

What are deductible expenses?

The goal is first and foremost to lower your taxes!  The performing artist has a number of tax deductions that are unique.

For the IRS, all deductible business expenses are those that are:

  1. Incurred in connection with your trade, business, or profession
  2. Must be “ordinary” and “necessary”
  3. Must “NOT be lavish or extravagant under the circumstances”

Business related expenses include:

  • Advertising and Publicity: Headshot sessions and reproductions, business cards, stationery, postcards, professional registries (i.e. Actors Access), demo reels, website development and hosting fees.
  • Apparel: Uniforms, costumes, special shoes (not suitable for street wear) theatrical makeup and wigs. Cleaning, alterations and repair of work-related apparel.
  • Auto/transportation expenses: Keep track of your round trip mileage to auditions and receipts for airfare, bus, car rental, lodging, parking, taxi and subway fare.
  • Equipment: Equipment can include computers, printers, ear prompters, etc. Equipment purchased is generally “depreciated” and written off over five to seven years. These “depreciable lives” are defined in the IRS code. The IRS also allows taxpayers up to a certain amount to write off and depreciate the full cost of the purchase in one tax year instead of a longer time span. Discuss with your tax preparer how much your equipment is used for personal and business use and what is the best way for you to take your deductions.
  • Gifts: Business related. Only $25.00 per year per person is deductible.
  • Home Office: If you use a room (or rooms) in your home exclusively for your business you will probably qualify for a home office deduction. The room can be a rehearsal space, teaching space, home recording and/or video studio, record keeping for the business, marketing, etc.

The home office deduction utilizes a formula based on the square footage of the business portion (the home office) of your home vs. the total square footage of the house or apartment and applies that percentage to all associated costs. The costs could include apartment rent, mortgage interest, real estate taxes, condo fees, utilities, insurance, repairs, etc.    New for 2013: “Safe Harbor Method” allows $5 per sq ft up to $1,500 maximum

  • Legal and professional fees: Commissions to agents and/or managers, attorney fees, tax preparation, required licenses, union and professional dues for organizations.
  • Meals: Necessary business related meals are 50% deductible. They must include direct business discussions. They can include breakfast, lunch or dinner meetings with agents, fellow actors or performers, directors, film & producers, etc. If a direct business purpose were documented then the deduction would be allowed.
  • Training: Acting, voice, dance lessons, or other education related to improving or maintaining your performance skills. This also includes rental fees for rehearsal space.
  • Supplies: Ink cartages, headshot reproductions, mailing supplies, make-up, fax and photocopy fees, postage and subscriptions to industry publications.



Written by:Traci Danielle; Brevard Talent Group

modified by Phyllis Smith; Smith Tax and Bookkeeping Service


Simplified home-office deduction safe harbor announced

 BY SALLY P. SCHREIBER, J.D.            JANUARY 15, 2013

On Tuesday, the IRS released Rev. Proc. 2013-13, which gives taxpayers an optional safe-harbor method to calculate the amount of the deduction for expenses for business use of a residence during the tax year under Sec. 280A, beginning with the current tax year.

Individual taxpayers who elect this method can deduct an amount determined by multiplying the allowable square footage by $5. The allowable square footage is the portion of the house used in a qualified business use, but not to exceed 300 square feet. The maximum a taxpayer can deduct annually under the safe harbor is $1,500. The IRS may update the $5 allowance from time to time.

Electing the safe-harbor is done on a timely filed original tax return (instead of on Form 8829,Expenses for Business Use of Your Home, which is used for the actual expense method), and taxpayers are allowed to change their treatment from year-to-year. However, the election made for any tax year is irrevocable.

No depreciation is allowed for the years in which the safe harbor is elected, but it is permitted in the years in which the actual expense method is used. The revenue procedure has detailed examples of how depreciation is calculated in a year subsequent to a year the safe-harbor method is used.

To use the sale-harbor method, taxpayers must continue to satisfy all the other requirements for a home-office deduction, including the requirement that the space in the residence used as an office be used exclusively for that purpose and the limitation that an employee qualifies for the home-office deduction only if the office is for the convenience of the taxpayer’s employer.

The deduction under the safe-harbor method cannot exceed the amount of gross income derived from the qualified business use of the home minus business deductions, and a taxpayer cannot carry over any excess to another tax year. If a taxpayer uses the actual expense method for calculating the deduction and has had his or her deduction limited by the gross income limitation in that year, the taxpayer can deduct this amount in the next year he or she uses the actual expense method, but cannot use the disallowed amount in a year he or she elects the safe harbor. This limit on carryovers for the safe-harbor method means taxpayers must be careful before electing it to be sure they will not lose any of their deduction.

Taxpayers sharing a home (for example, roommates or spouses, regardless of filing status), if otherwise eligible, may each use the safe harbor method provided by the revenue procedure, but not for qualified business use of the same portion of the home. The revenue procedure contains detailed rules for use of the home for part of the year. It allows taxpayers who have a qualified business use of more than one home for a tax year to use the safe harbor for only one home, but it permits them to use the actual expense method for the other homes.

Sally P. Schreiber ( is a JofA senior editor.


St. Charles County Job Seeker Services

Information on changing careers, resumes, interviewing, career planning, training, education, job opening, and more.

Job Search
  Information on writing a resume, cover letters, interviewing, how to research local employers, job fairs, using the internet, and more to assist you when you are ready to find the job.

Career Planning
  How to obtain the information you need to know before deciding on a career path and local labor market information.

Education and Training
  How to obtain skills required for your chosen career, things to think about before enrolling, how to pay for training and financial assistance information.

Voucher Training Provider Directory
  A list of programs approved for training under the Workforce Investment Act in Missouri.

Job Listings

Community Resources
  Information on other services to help workers.

Youth Programs
  Programs to assist those between the age of 14 and 21.

Don’t default on Student Loans – Modify your payment plan if possible

Repayment Plans and Calculators

When it comes time to start repaying your student loan(s), you can select a repayment plan that’s right for your financial situation. Generally, you’ll have from 10 to 25 years to repay your loan, depending on which repayment plan you choose.

  • Standard Repayment

With the standard plan, you’ll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you’ll have up to 10 years to repay your loans.

Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For that reason, having a 10-year limit on repayment, you may pay the least interest.              To calculate your estimated loan payments, go to the Standard Repayment plan calculator.

  • Extended Repayment

Under the extended plan, youll pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. If you’re a FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans. If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. This means, for example, that if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. Your fixed monthly payment is lower than it would be under the Standard Plan, but you’ll ultimately pay more for your loan because of the interest that accumulates during the longer repayment period.

This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be 25 years, your monthly payments will be less than with the standard plan. However, you may pay more in interest because you’re taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.         To calculate your estimated loan payments, go to the Extended Repayment plan calculator

  • Graduated Repayment

With this plan, your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.               To calculate your estimated loan payments, go to the Graduated Repayment plan calculator

  • *Income Based Repayment (IBR) Effective July 1, 2009

Income Based Repayment is a new repayment plan for the major types of federal loans made to students. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled.

  • Income Contingent Repayment (ICR) (Direct Loans Only)

This plan gives you the flexibility to meet your Direct LoansSM obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse’s income if you’re married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

  1. The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  2. 20 percent of your monthly discretionary income.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal).

The maximum repayment period is 25 years. If you haven’t fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

As of July 1, 2009, graduate and professional student Direct PLUS Loan borrowers are eligible to use the ICR plan. Parent Direct PLUS Loan borrowers are not eligible for the ICR repayment plan.            To calculate your estimated loan payments, go to the ICR plan calculator

  • Income-Sensitive Repayment Plan (FFEL Federal Family Education Loans)  Loans only)

With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Ask your lender for more information on FFEL Income- Sensitive Repayment Plans.

* Income-Based Repayment Plan

The information below describes the Income-Based Repayment (IBR) Plan for federal student loans. It includes the IBR eligibility requirements, the benefits of IBR, an IBR payment calculator, and some examples of how a borrower’s monthly student loan payment amount can be reduced under IBR. For a PDF version of this information, see

What is Income-Based Repayment?

Income-Based Repayment (IBR) is a repayment plan for the major types of federal student loans that caps your required monthly payment at an amount intended to be affordable based on your income and family size.

What federal student loans are eligible to be repaid under an IBR plan?

All Stafford, PLUS and Consolidation Loans made under either the Direct Loan or FFEL Program are eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans (PLUS Loans that were made to parent borrowers), or Consolidation Loans that repaid parent PLUS Loans. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

Who is eligible for IBR?

You may enter IBR if your federal student loan debt is high relative to your income and family size. While your loan servicer will perform the calculation to determine your eligibility, you can use the U.S. Department of Education’s IBR calculator to estimate whether you would likely qualify for the IBR plan. The calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment you would be required to pay on your eligible loans under a 10-year standard repayment plan, based on the greater of the amount you owed on your loans when they initially entered repayment or the amount you owe at the time you request IBR, then you are eligible to repay your loans under IBR.

If you are married and you and your spouse file a joint federal tax return, and if your spouse also has IBR-eligible loans, your spouse’s eligible loan debt is taken into account when determining whether you are eligible for IBR. In this case, the required monthly payment amount under a 10-year standard repayment plan is determined based on the combined amount of your IBR-eligible loans and your spouse’s IBR-eligible loans, using the greater of the amount owed when the loans initially entered repayment or the amount owed at the time you or your spouse request IBR. If the combined monthly amount you and your spouse would be required to pay under IBR is lower than the combined monthly amount you and your spouse would pay under a 10-year standard repayment plan, you and your spouse are eligible for IBR.

What are the benefits of IBR?

  • PAY AS YOU EARN — Under IBR, your monthly payment amount will be less than the amount you would be required to pay under a 10-year standard repayment plan, and may be less than under other repayment plans. Although lower monthly payments may be of great benefit to a borrower, these lower payments may result in a longer repayment period and additional accrued interest.
  • INTEREST PAYMENT BENEFIT — If your monthly IBR payment amount does not cover the interest that accrues on your loans each month, the government will pay your unpaid accrued interest on your Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from the date you began repaying your loans under IBR.
  • 25-YEAR CANCELLATION — If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be canceled.
  • 10-YEAR PUBLIC SERVICE LOAN FORGIVENESS — If you work in public service, on-time, full monthly payments you make under IBR (or certain other repayment plans) while employed full-time in a public service job will count toward the 120 monthly payments that are required to receive loan forgiveness through the Public Service Loan Forgiveness Program. Through this program, you may be eligible to have the remaining balance of your Direct Loans forgiven after you have made the 120 qualifying as described above. The Public Service Loan Forgiveness Program is available only for Direct Loans. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program. However, only the on-time, full monthly payments made under IBR or certain other repayment plans while you are a Direct Loan borrower will count toward the required 120 monthly payments. For more information about this program, review the Department’s Public Service Loan Forgiveness Program Fact Sheet.

Are there any disadvantages to repaying under IBR?

  • YOU MAY PAY MORE INTEREST — The faster you repay your loans, the less interest you pay. Because a reduced monthly payment in IBR generally extends your repayment period, you may pay more total interest over the life of the loan than you would under other repayment plans.
  • YOU MUST SUBMIT ANNUAL DOCUMENTATION — To set your payment amount each year, your loan servicer needs updated information about your income and family size. If you do not provide the documentation, your monthly payment amount will be the amount you would be required to pay under a 10-year standard repayment plan, based on the amount you owed when you began repaying under IBR.

How is the IBR amount determined?

Under IBR, the amount you are required to repay each month is based on your Adjusted Gross Income (AGI) and family size. If you are married and file a joint federal tax return with your spouse, your AGI includes both your income and your spouse’s income. The annual IBR repayment amount is 15 percent of the difference between your AGI and 150 percent of the Department of Health and Human Services Poverty Guideline for your family size and state. This amount is then divided by 12 to get the monthly IBR payment amount.

The following chart shows the maximum IBR monthly payment amounts for a sample range of incomes and family sizes using the Poverty Guidelines that were in effect as of January 20, 2011 for the 48 contiguous states and the District of Columbia.

IBR Monthly Payment Amount
Family Size
1 2 3 4 5 6 7
$10,000 $0 $0 $0 $0 $0 $0 $0
$15,000 $0 $0 $0 $0 $0 $0 $0
$20,000 $46 $0 $0 $0 $0 $0 $0
$25,000 $108 $37 $0 $0 $0 $0 $0
$30,000 $171 $99 $28 $0 $0 $0 $0
$35,000 $233 $162 $90 $18 $0 $0 $0
$40,000 $296 $224 $153 $81 $9 $0 $0
$45,000 $358 $287 $215 $143 $72 $0 $0
$50,000 $421 $349 $278 $206 $134 $63 $0
$55,000 $483 $412 $340 $268 $197 $125 $54
$60,000 $546 $474 $403 $331 $259 $188 $116
$65,000 $608 $537 $465 $393 $322 $250 $179
$70,000 $671 $599 $528 $456 $384 $313 $241

After the initial determination of your eligibility for IBR, your payment may be adjusted each year based on changes in your income and family size, but your required monthly payment amount will never be more than what you would be required to pay under a 10-year standard repayment plan, based on your outstanding loan balance on the date you began repaying the loans under IBR (unless you choose to exit the IBR program).

Are there examples of borrowers who are eligible for IBR and borrowers who are not?

Example 1 — Based upon the IBR repayment formula a borrower with a family size of one and an AGI of $30,000 would have an IBR calculated payment amount of $171 per month. If this borrower had total eligible student loan debt of $25,000 when the loans initially entered repayment, and the loan balance had increased to $30,000 when the borrower requested IBR, the calculated monthly repayment amount under a 10-year standard plan would be based on the higher of the two amounts. Using an interest rate of 6.8%, the 10-year standard payment amount for $30,000 would be $345. Since the $171 IBR calculated amount is less than the 10-year plan amount of $345, the borrower would be eligible to repay under IBR at a monthly amount of $171. However, if this borrower’s total eligible loan debt used to calculate the 10-year standard amount was only $10,000 the 10-year standard payment would be $115 per month, which is less than the IBR amount of $171. Therefore, the borrower would not be eligible for IBR.

Example 2 — A borrower with a family size of four and income of $50,000 would have an IBR calculated monthly payment amount of $206. If this borrower had total eligible student loan debt of $20,000 when the loans initially entered repayment, and this amount had not changed when the borrower requested IBR, the calculated monthly repayment amount under a 10-year standard plan would be based on $20,000. Using an interest rate of 6.8%, the 10-year standard payment amount for $20,000 would be $230. Since the $206 IBR calculated amount is less than the 10-year plan amount of $230, the borrower would be eligible to repay under IBR at a monthly amount of $206. However, if the borrower’s total eligible loan debt used to calculate the 10-year standard amount was only $15,000, the 10-year calculated amount would be $173 per month, which is less than the IBR amount of $206. This borrower would not be eligible for IBR.

Income-Based Repayment Questions and Answers (Q&As)
For additional information on IBR, check out the Income-Based Repayment Q&As. The Q&As are grouped into six categories: General Information, Eligible Loans, Determination of IBR Monthly Payment Amount, Married Borrowers, Application Process, and Other Information. The answers are dated and, as new questions are added or a previous response is updated, we will include a new date.

Health Care Reform Implementation Timeline

Health Reform Implementation Timeline

The implementation timeline reflects the provisions of the Patient Protection and Affordable Care Act, which President Obama signed on March 23, 2010, as well as provisions in the Health Care & Education Reconciliation Act passed by the House and Senate.

It includes more than a dozen key provisions scheduled to take effect in 2010, including the creation of a national high-risk pool for people with pre-existing conditions that can’t buy insurance on their own, tax credits for small businesses that obtain health coverage for their workers and assistance for Medicare beneficiaries with high drug costs who get hit by the drug benefit’s coverage gap or “doughnut hole,” and continues through 2014, when the major reforms to expand access to health coverage are fully implemented.

Continue reading Health Care Reform Implementation Timeline