Adjusting tax withholdings to decrease refund?

[optimistic1]

Always best to adjust your witholdings for your actual liablity prior to filing for those just in case scenarios. There is no sense in letting the trustee snag your whole tax return, and there is equally no sense in allowing the US government borrowing your hard earned cash at a 0% interest rate.

[spearmint]

Is it okay then if you do it PRIOR to filing?

[getmeouttahere]

I am in Eastern MI district.

We are in the Eastern district also.

[ccfriend]

We are in the Eastern district also.

I filed in Bay City. Did you have to send any portion of your tax refund? I had to send in anything over $1602

[getmeouttahere]

I filed in Bay City. Did you have to send any portion of your tax refund? I had to send in anything over $1602

We filed in Detroit. We have to send in 100% of our refunds, which is why we were hoping to change our withholdings after confirmation. We just sent the Trustee $6500, which hurt . . . but . . . the way I look at it, is we would probably have used it to pay down some debt anway.

[optimistic1]

Is it okay then if you do it PRIOR to filing?

I don't see how it couldn't be ok.

If based on your filing status, you adjust your withholding prior to filing to insure that you your tax liability is met, and you dont over or underpay, then why would it be wrong? If you have too much taken out of your payroll, you are treating it like disposable income that you are not using for allowable expenses, and instead saving it. That is why the trustee's want your refund, and it's also why they wont allow you to change it after you file.

It is in your best interest to utilize the IRS withholding calculator before you file, although, you may want the change to reflect for a 6 month period. Especially if you live in a district like the OP and others have stated. I don't know what my trustee's preference is, other than they want my tax returns, and have stated they "may" want my refund. My attorney said they don't even look at the returns, and not to worry about it, just make my payment until the plan is complete.

I am not taking chances though, I am having the correct amount of tax taken out, which is easy if your income is stable and doesn't fluctuate from month to month.

[ccfriend]

We filed in Detroit. We have to send in 100% of our refunds, which is why we were hoping to change our withholdings after confirmation. We just sent the Trustee $6500, which hurt . . . but . . . the way I look at it, is we would probably have used it to pay down some debt anway.

Did you have to pay in the state refund too? I think the reason we got the 1602 amount is because the trustee took last years refund and divided it. (My husband did not file with me) The 1602 was my half and it was divided by 12 and added into my monthly income. He only did that with the federal stuff so I am still not sure about the state refund. I emailed both the trustee and my lawyer but I haven't heard anything back. I agree that I would have just used the amount to pay down more debt if I wasn't in bk.

[newbie2]

Please be careful everyone about adjusting withholdings after confirmation.

I am also in the Eastern District of Michigan (Detroit court) and on my confirmation letter it specifically states that I am to turn in all income tax refunds and to not alter anything after confirmation that could change the tax refunds.

Read your confirmation statement/letter. Everything will be spelled out for you in that.