Tax Refund and Chapter 13

[Heightsman]

let's say smeoe files a Chapter 13. Then files tax retuirn and gets $3,000 refund. Does this money go to the trustee? How is the money then applied to the debts? Is it used to accelerate some payments on the plan to just to reudce the balance owed under the plan?

[HRx]

let's say smeoe files a Chapter 13. Then files tax retuirn and gets $3,000 refund. Does this money go to the trustee? How is the money then applied to the debts? Is it used to accelerate some payments on the plan to just to reudce the balance owed under the plan?

The monies can be applied toward your repayment plan.

[chicago57]

Tax refund

Well, so much for my last posted message... For the past 3 years I have been getting my refund and filing electronically. Each refund was a minimum of $2,000. I filed electronically with TurboTax and my money was suppose to be in my account Friday. I decided to go to the IRS website to check status for a friend and plugged my numbers in for the heck of it! Guess what? Error processing my return, and the recorded message was call the bankruptcy insolvency unit. I've left 2 messages and cannot get any call back. I have one more payment in my plan, so not sure how or when I'll get my money back. So much for getting cocky!!


PREVIOUS MESSAGE LEFT:

Even if you owe the IRS a $20,000 balance in the Plan, you get all current refunds and can do whatever you want with them.

[HRx]

I'm presently in a chapter13 and asked my lawyer the same question. He told me to file the old way and have a refund check mailed to me. He told me not to do it electronically. I'm in Tennessee and taking his advice. What difference it makes who knows.

Regardless of how you file, snail mail or electronic.......if the IRS is collecting against you they'll withhold your refund either route you take! ;)

Good Luck!

[HHM]

Yeah, for whatever reason, when you are in BK, the Trustee's don't want the debtor to file their taxes electronically or arrange electronic deposit of refund. I would assume the reason is that it screws up their ability to intercept the refund.

[dck]

I have a similar situation with my tax refund. I filed BK (13) in March of last year. I knew nothing about "reporting" a refund to my trustee. They still have not told me to do so. I called to check to see if I should wait on a possible 1099-C. The lawyer and the trustee both said that they do not send them out. I was advised by a tax consultant to go ahead and E-file it. I did this and on 2-10, 2 days later, I recieved a 1099-A on a home I gave up. I was told that same day by the tax consultant to amend the return. The value of the home was a few thousand more than the pay-off.
And if that is not enough. Now I am concerned that I may need to report the refund to my trustee. If so, what happens to the refund? It's suppose to be E deposited next Friday.

Can I just keep the refund, (and amend it) and forget about these other concerns?

[chicago57]

Good News!!

Well, believe it or not. My money was direct deposited into my bank account exactly the day Turbo Tax said it would be. So much for them taking it. So, I did get my return every year. By the way, still never got a call from the IRS. :o

Well, so much for my last posted message... For the past 3 years I have been getting my refund and filing electronically. Each refund was a minimum of $2,000. I filed electronically with TurboTax and my money was suppose to be in my account Friday. I decided to go to the IRS website to check status for a friend and plugged my numbers in for the heck of it! Guess what? Error processing my return, and the recorded message was call the bankruptcy insolvency unit. I've left 2 messages and cannot get any call back. I have one more payment in my plan, so not sure how or when I'll get my money back. So much for getting cocky!!


PREVIOUS MESSAGE LEFT:

Even if you owe the IRS a $20,000 balance in the Plan, you get all current refunds and can do whatever you want with them.

[dck]

That is good news. I'll wait to see if it is deposited as Turbo Tax said it would be. This forum answers more questions than anywhere else I look for answers to my questions. Thanks.

[palhalwa]

I have a similar situation with my tax refund. I filed BK (13) in March of last year. I knew nothing about "reporting" a refund to my trustee. They still have not told me to do so. I called to check to see if I should wait on a possible 1099-C. The lawyer and the trustee both said that they do not send them out. I was advised by a tax consultant to go ahead and E-file it. I did this and on 2-10, 2 days later, I recieved a 1099-A on a home I gave up. I was told that same day by the tax consultant to amend the return. The value of the home was a few thousand more than the pay-off.
And if that is not enough. Now I am concerned that I may need to report the refund to my trustee. If so, what happens to the refund? It's suppose to be E deposited next Friday.

Can I just keep the refund, (and amend it) and forget about these other concerns?

Boy what state are you guys from. Here in Washington State they take it all and it does not reduce the debt any!!!! I just now had my 2003 refund that IRS said was sent to the trustee applied to my chapter 13, IRS took over 1 year to send it to them.

[chicago57]

Refund

I'm from Illinois. I cannot believe they take your refund and it doesn't get applied to the outstanding balance on your Plan. I think that's wrong. You should talk to your lawyer. Where do they apply it? Make sure you keep up monthly with the Trustee's office to assure your funds are being sent out to your accounts. I didn't and when I finally did, I found out that I had 5 mos. to go and thought I was making my final payment. Only to learn my attorney screwed up and didnt add my escrow in when he did the Plan just added the principal. In December when I thought I was done, I still owed $11,000. That's because my escrow amount of $311 x 36 mos. = $11,196... so that's what I still owed. I just took a loan from my 401k to make the payment lump sum. I had to get this over with! Every month they kept adding another mortgage payment on and I want to refinance and have to get dismissed to get a good rate. What a joke... Never again..

[Summer]

We live in Mississippi, and we have been in chapter 13 for 13 months. We e-filed our taxes and our refund has been direct deposited into our account. We received a letter from our trustee stating " in order to get a discharge all tax refunds must be sent to trustee, then our lawyer tells us 50% has to be given to trustee." I been reading post on this sight stating some people kept their refunds. What should we do????????

[ggaston]

I am from N.C. we are currently starting a Chpt 13 just had our 341 meeting read paper work we were given, and it stated to report any tax refunds. I hope they do not take all my refund, I do not owe any back taxes, do I have any hope of keeping any money from refund....

[MISSLADY]

I filed chapter 13 and included irs and i got my refund, this year, I took longer than usual but i got all of my money even though i only got back about $1100.

[harvijo]

i'm in oklahoma, and we have gotten all of our refunds because we were told that as long as we were paying 20% to our unsecured creditors that we could keep it. we don't have to report it, and have never been asked about it. guess it depends on the state you are in?

[chicago57]

We live in Mississippi, and we have been in chapter 13 for 13 months. We e-filed our taxes and our refund has been direct deposited into our account. We received a letter from our trustee stating " in order to get a discharge all tax refunds must be sent to trustee, then our lawyer tells us 50% has to be given to trustee." I been reading post on this sight stating some people kept their refunds. What should we do????????

Summer,
I'm wondering if laws vary from state to state for the rules on Chapter 13 and tax refunds. Like i mentioned I owed the IRS $24,000 and for the 3 years I was in C13, I received a refund every year and they were never taken. Good luck.