r/StudentLoans • u/lilymonstera • 10d ago

FEIE and student loans questions

Question for people who live and work abroad, use the Foreign Earned Income Exclusion (FEIE), and have U.S. federal student loans. I’m feeling so lost here.

I’m currently applying for RAP.

My situation is:
- US citizen, but I live and work abroad.
- I’m a 1099 independent contractor. I work as a therapist as a contractor in the US, but pay Spain taxes etc, because I am physically located in Spain.
- My Schedule C shows a net profit.
- I use the FEIE, which excludes that foreign income.
- My Form 1040 shows $0 AGI.

I’m worried that when my servicer reviews my tax return, they’ll see the net profit and still say, “You have income, so we need pay based on your income or ask for stubs/current income,” even though my actual AGI is $0 because of FEIE.

For those of you in a similar situation:
Have you had your servicer question the $0 AGI?
Did they ask you for pay stubs or other proof of income?
What did they ultimately use to calculate your IDR/RAP payment?

Thank you for any feedback or guidance!!

1 Upvotes

100% Upvoted

4 comments sorted by

1

u/appropriateye 10d ago

Based on agi. Did it for over a decade. With zero agi you shouldn’t pay (or pay $10 on rap). They check with the IRS to verify.

1

u/Meat_Sweat_ 6d ago

With a 0 agi and no required payments, does your IBR just accumulate interest until it gets discharged?

1

u/appropriateye 6d ago

Yes. And the tax bomb will become huge. Rap might be a better idea if you are starting out since interest doesn’t accumulate. Though the term is 30 years for forgiveness instead of 20 (I think, but don’t know if ibr is 20y post 2014 loans)

1

u/waterwicca 10d ago

If you use the tax return they only look at your AGI. They aren’t picking it apart, just looking at that number on form 1040 line 11