Taxes Included In Income

[SANRA308]

NEW HERE AND SORRY IF THIS HAS BEEN ASKED BEFORE,i SEARCHED BUT DID NOT FIND THE ANSWER. We are about to file chapter 13 and our lawyer told us that we have to include our tax refund we got in Feb.2007 as part of our 6 month income. we got 2400 which increases the monthly income by 400dollars each month. unfair given that you only recieve 1 refund a year not 2, so I will have to work more to make up the 400, also plan to increase the # of deductions so we wont get as much of a refund next year. just wondering if anyone else has had the same problem

[tofargone]

Maybe its a regional thing, but that doesn't make any sense to me. ( Where are you located at )

Now the trustee may want your refund every year, but I can't see how they can figure that into what your payment will be.

The only other thing I would recommend is if you have to add it in, change your deductions. If you are getting that much back you should be have a good amount more to claim.

One other thing, I would think about talking to another Lawyer just in case. Not all Lawyers are equal, and from what I've read on this forum some are plain awful.


Good Luck

[JollyGG]

NEW HERE AND SORRY IF THIS HAS BEEN ASKED BEFORE,i SEARCHED BUT DID NOT FIND THE ANSWER. We are about to file chapter 13 and our lawyer told us that we have to include our tax refund we got in Feb.2007 as part of our 6 month income. we got 2400 which increases the monthly income by 400dollars each month. unfair given that you only recieve 1 refund a year not 2, so I will have to work more to make up the 400, also plan to increase the # of deductions so we wont get as much of a refund next year. just wondering if anyone else has had the same problem

Since your income is based on your gross income your income tax return should not be included. Otherwise that money is listed twice.

[DivorceRuinedMe]

Since your income is based on your gross income your income tax return should not be included. Otherwise that money is listed twice.

I was just going to say the same thing. I would go to another atty or ask Cathy Moran on this board:

http://community.lawyers.com/messageboards/board.asp?mbId=7&

She's an attorney and is VERY helpful. HTH!

[Minnymouth]

You income tax refund is not part of your monthly income that your payments are based on...............

But yet, the Trustee has the right to seize your income tax refund money and pay it to the credits because it is extra income (one time) to you...... just as if you got a "bonus" , sold a peice of property, etc....... during the bankruptcy process.

No he will not be after the refund every year...... only while you are in bankruptcy.

Adjust your withholdings to create a smaller refund, and more money in your pocket each month..... that way Trustee can't seize it...... while in bankruptcy and Chapter 13.

[Chicago]

I had the same question as I received a combined federal/IL state refund of $2486 this year. I emailed my attorney and he said that "YES, your IRS return is considered income."

I can sort of see the logic in that it could be used in the averaging of income over the last six months as they just add it on top as additional income over what you earn from your job. Maybe I'm wrong, though.

[CindyLou]

Yes it will be counted when figuring our your actual disposabe income. They should be dividing by 12, not 6 though. It is then understand that you would have changed your withholding to match the amount you got back, which in turn permanently increases your disposable income. This is yet another perfect example of why we should never give uncle sam extra money through out the year!!!!

[SANRA308]

State is Oklahoma , I was told if we got the refund 6 months prior to filling, its included in income just like bonus ect. I would not have a problem if it was devided by 12 instaed of 6, the we could just adjust our taxes, Spoke with 2 other lawyers 1st agreed with the current lawyer, the other stated it should not be added to income? so many inconsistancies lawyer to lawyer ,trustee to trustee.

[JollyGG]

Schedule I line 1 asks for - Current monthly gross wages, salary, and commissions

Income taxes are taken out of your gross income and if you paid over your fair share they are refunded to you.

Therefor if add your income tax on top of your gross income you are counting that money twice.

Your income tax return is an asset that the courts can take if you can't exempt it. Larger tax returns are often siezed by the trustee in a Chapter 13 as extra money. But they are not income.

[tofargone]

It always amazes me the differences from lawyer to lawyer. I still have an issue counting a tax return as income. I can see showing it as an asset, but the chance of double dipping is to great to cover it as income. I would try to look at some past cases if possible to see if that is a trend in your area or if your lawyer is trying to cover his own butt and show more money so the case is an easier sell.