Introduction
As an incoming physician, navigating student loans can feel overwhelming. However, there’s a straightforward strategy that could save you thousands.
By filing a tax return in 2025—reporting your 2024 income, even if it’s $0—you can lock in $0 monthly payments under an Income-Driven Repayment (IDR) plan during your first year of residency.
Here’s how you can take advantage of this opportunity and secure lower payments while staying focused on your training.
Introduction
As an incoming physician, navigating student loans can feel overwhelming. However, there’s a straightforward strategy that could save you thousands.
By filing a tax return in 2025—reporting your 2024 income, even if it’s $0—you can lock in $0 monthly payments under an Income-Driven Repayment (IDR) plan during your first year of residency.
Here’s how you can take advantage of this opportunity and secure lower payments while staying focused on your training.
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Subscribe to The Dream Bigger – Physician Edition Newsetter
A weekly newsletter designed for early-career physicians and anyone looking to enhance their financial well-being.
Discover helpful tips, strategies, and insights to dream bigger and take control of your financial future. 🥼
Get student loan updates, money-saving tips, and financial strategies – all delivered to your inbox.
Filing a Tax Return: What You Need to Know
Each year, filing a tax return is required to report your income for the previous year.
For instance, by April 15, 2025, you’ll need to file a return reflecting your income from January 1 to December 31, 2024.
If your earned income for the year falls below the annual standard deduction, you aren’t required to file a tax return.
For the 2024 tax year, the standard deduction is $14,600 for single filers or those married filing separately (MFS), and $29,200 for those married filing jointly (MFJ).
Filing a Tax Return: What You Need to Know
Each year, filing a tax return is required to report your income for the previous year.
For instance, by April 15, 2025, you’ll need to file a return reflecting your income from January 1 to December 31, 2024.
If your earned income for the year falls below the annual standard deduction, you aren’t required to file a tax return.
For the 2024 tax year, the standard deduction is $14,600 for single filers or those married filing separately (MFS), and $29,200 for those married filing jointly (MFJ).
Income During 3rd-Year and 4th-Year Medical School
For many 4th-year medical students, the tax period includes the second half of your MS3 year and the first half of your MS4 year.
This is a time when most students did not earn any income.
Income During 3rd-Year and 4th-Year Medical School
For many 4th-year medical students, the tax period includes the second half of your MS3 year and the first half of your MS4 year.
This is a time when most students did not earn any income.
Filing When You Earned No Income
Since you didn’t earn income in 2024, you’re not required to file a tax return.
But after graduating, your top priority is to complete a Direct Loan Consolidation and enroll in an Income-Driven Repayment (IDR) plan.
Filing When You Earned No Income
Since you didn’t earn income in 2024, you’re not required to file a tax return.
But after graduating, your top priority is to complete a Direct Loan Consolidation and enroll in an Income-Driven Repayment (IDR) plan.
Why This Matters for Your Student Loans
An Income-Driven Repayment (IDR) plan calculates your monthly payment based on your income and family size.
With your 2024 income being $0, you can calculate your IDR payment based on this, potentially qualifying for $0 monthly payments!
Why This Matters for Your Student Loans
An Income-Driven Repayment (IDR) plan calculates your monthly payment based on your income and family size.
With your 2024 income being $0, you can calculate your IDR payment based on this, potentially qualifying for $0 monthly payments!
Proving Your Income for IDR
Here’s the catch: to enroll in an IDR plan, you must prove your prior year’s income.
Even though you earned $0, you still need to show this officially.
Proving Your Income for IDR
Here’s the catch: to enroll in an IDR plan, you must prove your prior year’s income.
Even though you earned $0, you still need to show this officially.
How to Prove $0 Income
The best way to prove you earned $0 in 2024 is by e-Filing a tax return.
This legally documents your income as $0, which you can use to calculate your IDR payment.
How to Prove $0 Income
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Special Considerations for Married Students
If you’re single or filing as Married Filing Separately (MFS) in a non-community property state, you can report only your $0 income.
However, if you file as Married Filing Jointly (MFJ) with a working partner, your joint income will be used.
Tip: Consider filing separately if you want to exclude your partner’s income, but consult a professional first to weigh the pros and cons.
Special Considerations for Married Students
If you’re single or filing as Married Filing Separately (MFS) in a non-community property state, you can report only your $0 income.
However, if you file as Married Filing Jointly (MFJ) with a working partner, your joint income will be used.
Tip: Consider filing separately if you want to exclude your partner’s income, but consult a professional first to weigh the pros and cons.
Need Personalized Help?
Some loan situations are more complex.
For those who need more tailored advice, a 1-hour student loan consultation is available for $299.
Whether you’re looking for specific guidance now or down the road, this resource is here to help you take the right steps with your loans.
Looking for a custom student loan plan?
Need Personalized Help?
Some loan situations are more complex.
For those who need more tailored advice, a 1-hour student loan consultation is available for $299.
Whether you’re looking for specific guidance now or down the road, this resource is here to help you take the right steps with your loans.
Looking for a custom student loan plan?
Action Steps to Secure $0 Payments
☁️ By April 15, 2025: e-File your 2023 tax return, showing $0 income.
☁️ By May 2025: Consolidate your loans and enroll in an Income-Driven Repayment (IDR) plan.
Following these steps could result in $0 monthly payments for your first year in residency!
Action Steps to Secure $0 Payments
☁️ By April 15, 2025: e-File your 2023 tax return, showing $0 income.
☁️ By May 2025: Consolidate your loans and enroll in an Income-Driven Repayment (IDR) plan.
Following these steps could result in $0 monthly payments for your first year in residency!
In this guide, we will use FreeTaxUSA to demonstrate the steps.
While each tax preparation software may vary, they generally follow a similar flow.
In this guide, we will use FreeTaxUSA to demonstrate the steps.
While each tax preparation software may vary, they generally follow a similar flow.
If you did not file taxes in 2023, you can skip this section.
If you did not file taxes in 2023, you can skip this section.
Complete this section accurately, including your Social Security Number.
Linking this return to you requires the inclusion of your Social Security Number.
Complete this section accurately, including your Social Security Number.
Linking this return to you requires the inclusion of your Social Security Number.
In this step, it’s encouraged you communicate with your parents/guardians and provide accurate answers to the questions.
If you are claimed on your parents’ tax returns, they may be eligible for certain credits.
While this shouldn’t hinder your ability to process the $0 income tax return, providing truthful responses is important to avoid potential rejection.
To learn more, click here.
In this step, it’s encouraged you communicate with your parents/guardians and provide accurate answers to the questions.
If you are claimed on your parents’ tax returns, they may be eligible for certain credits.
While this shouldn’t hinder your ability to process the $0 income tax return, providing truthful responses is important to avoid potential rejection.
To learn more, click here.
If you earned income and received a W-2 from your employer, utilize the W-2 to report your income. This is the simplest method to complete the tax return, and you can skip the remaining steps.
If you did not work and do not possess a W-2, choose the option “I don’t have any W-2s.”
Keep in mind, if your earned income exceeds the standard deduction, it is mandatory to report the income.
If you earned income and received a W-2 from your employer, utilize the W-2 to report your income. This is the simplest method to complete the tax return, and you can skip the remaining steps.
If you did not work and do not possess a W-2, choose the option “I don’t have any W-2s.”
Keep in mind, if your earned income exceeds the standard deduction, it is mandatory to report the income.
If you lack W-2 income, this is the section where you’ll report interest income, as previously discussed.
As many software options don’t accommodate the submission of a tax return reporting $0 income, this method serves as a workaround for that issue.
If you lack W-2 income, this is the section where you’ll report interest income, as previously discussed.
As many software options don’t accommodate the submission of a tax return reporting $0 income, this method serves as a workaround for that issue.
Choose the option “+ Interest Income” to input your interest earnings.
Choose the option “+ Interest Income” to input your interest earnings.
Add the payer’s name and fill in Box 1 with the relevant information. If you did not earn any interest in the previous year, input “1” in Box 1 – Interest Income.
To enable the tax software to process a tax return reporting $0 income, consider the following scenarios based on interest income:
☁️ Received Interest Income:
If you have money in a savings or investment account, you might have received a 1099-INT from the financial institution. In this case, use the information from the 1099-INT to report the interest income in the software.
☁️ No Interest Income Received:
If you haven’t received any interest income, create a scenario involving someone in your life, such as a family member or friend, to whom you might have lent money. Suppose they paid you back $1 in interest.
For example:
During the year, you lent money to XYZ. When XYZ repaid you, they returned the original amount along with $1 in interest. This $1 interest amount will be reported in the tax software if you cannot process the tax return showing $0 income.
Add the payer’s name and fill in Box 1 with the relevant information. If you did not earn any interest in the previous year, input “1” in Box 1 – Interest Income.
To enable the tax software to process a tax return reporting $0 income, consider the following scenarios based on interest income:
☁️ Received Interest Income:
If you have money in a savings or investment account, you might have received a 1099-INT from the financial institution. In this case, use the information from the 1099-INT to report the interest income in the software.
☁️ No Interest Income Received:
If you haven’t received any interest income, create a scenario involving someone in your life, such as a family member or friend, to whom you might have lent money. Suppose they paid you back $1 in interest.
For example:
During the year, you lent money to XYZ. When XYZ repaid you, they returned the original amount along with $1 in interest. This $1 interest amount will be reported in the tax software if you cannot process the tax return showing $0 income.
In the upcoming sections, you will encounter various additional questions.
It’s important to note that this guide is intended solely for reporting $0 income, specifically for calculating an Income-Driven Repayment payment.
This guide should not be used to evade taxes or exploit tax credits and deductions.
Keep this in mind as you progress through the remaining sections, where you will likely respond with “No” to most questions.
If you earned income in the previous year or file taxes married filing jointly (MFJ) with a partner, it is imperative to accurately report that information on your tax return.
This guide is not designed to assist in tax avoidance; rather, it is tailored for individuals with $0 income who are not obligated to file taxes but wish to e-File a tax return for calculating their student loan payments.
Upon completing this step, there might be a brief delay before the information is processed.
Once accepted by the IRS, and your student loans are no longer in “In School Status” after graduation, you can proceed to complete the Direct Loan Consolidation application and enroll in an Income-Driven Repayment plan.
In the upcoming sections, you will encounter various additional questions.
It’s important to note that this guide is intended solely for reporting $0 income, specifically for calculating an Income-Driven Repayment payment.
This guide should not be used to evade taxes or exploit tax credits and deductions.
Keep this in mind as you progress through the remaining sections, where you will likely respond with “No” to most questions.
If you earned income in the previous year or file taxes married filing jointly (MFJ) with a partner, it is imperative to accurately report that information on your tax return.
This guide is not designed to assist in tax avoidance; rather, it is tailored for individuals with $0 income who are not obligated to file taxes but wish to e-File a tax return for calculating their student loan payments.
Upon completing this step, there might be a brief delay before the information is processed.
Once accepted by the IRS, and your student loans are no longer in “In School Status” after graduation, you can proceed to complete the Direct Loan Consolidation application and enroll in an Income-Driven Repayment plan.
Conclusion
Filing a tax return, even if you’re not required to due to low or no income, is an important step for 4th-year medical students.
By documenting your $0 income, you set yourself up for $0 monthly payments during residency when enrolling in an Income-Driven Repayment (IDR) plan.
Following the steps outlined here ensures you can take full advantage of repayment options and keep your student loan payments manageable as you transition into your medical career.
By preparing now, you’re setting yourself up for financial success during residency and beyond.
Disclosure: This content is for informational purposes only and does not constitute personalized financial advice. We recommend consulting with your tax and financial professional for tailored guidance.
Conclusion
Filing a tax return, even if you’re not required to due to low or no income, is an important step for 4th-year medical students.
By documenting your $0 income, you set yourself up for $0 monthly payments during residency when enrolling in an Income-Driven Repayment (IDR) plan.
Following the steps outlined here ensures you can take full advantage of repayment options and keep your student loan payments manageable as you transition into your medical career.
By preparing now, you’re setting yourself up for financial success during residency and beyond.
Disclosure: This content is for informational purposes only and does not constitute personalized financial advice. We recommend consulting with your tax and financial professional for tailored guidance.
Start Dreaming Bigger,
Finally Take Control of Your Student Loans!
Start Dreaming Bigger,
Finally Take Control of Your Student Loans!
It All Begins with a Diagnosis…
At Dream Bigger Financial, we’re dedicated to setting early-career physicians on the right financial treatment plan.
With a comprehensive diagnosis, we guide you towards financial peace of mind, ensuring you can be your best self for your loved ones and patients.
Considering financial planning?
We’re currently accepting new patients!
If you prefer self-diagnosing,
join us on social media!
We regularly share tips and tricks on lowering taxes, managing student loans, saving for retirement, and guiding you to live your best financial life.
Michael Putterman, CFP®
☁ Virtually serving clients nationwide ☁
It All Begins with a Diagnosis…
At Dream Bigger Financial, we’re dedicated to setting early-career physicians on the right financial treatment plan.
With a comprehensive diagnosis, we guide you towards financial peace of mind, ensuring you can be your best self for your loved ones and patients.
Considering financial planning?
We’re currently accepting new patients!
If you prefer self-diagnosing,
join us on social media!
We regularly share tips and tricks on lowering taxes, managing student loans, saving for retirement, and guiding you to live your best financial life.
Michael Putterman, CFP®
☁ Virtually serving clients nationwide ☁