Question about income tax refund

[marcymcgee]

So far, our trustee has not made mention of our tax refund; my question is, do they all want it (we usually get back around $3,000) and if so, I'm assuming it wil be applied to our BK debt ... if so, does this shorten the life of our monthly obligation? Currently, the proposed length is 60 months.

[forgotten]

So far, our trustee has not made mention of our tax refund; my question is, do they all want it (we usually get back around $3,000) and if so, I'm assuming it wil be applied to our BK debt ... if so, does this shorten the life of our monthly obligation? Currently, the proposed length is 60 months.

That will need to be a question to your attorney. It varies between each district. Some trustees want it all, some allow you keep a portion, and some allow you to keep all of it.

If you have to submit your refund to the trustee it will be divided up between your unsecured creditors. It will only shorten your plan if you are paying back 100% of your debts, otherwise its just extra money to the creditors.

[marcymcgee]

I do believe I did ask my lawyer, and never really got a straight-forward answer.

I believe the payment breakdown is, we are paying back 100% of secured, and about 80% of unsecured.

[77ford]

Our trustee wanted it all! State and Federal refunds for the first 3 years of our case. It didn't reduce what we owed at all. We still paid our whole 60 payments plus the refunds. It sucked. LOL

[forgotten]

I was told we get to keep everything here... but now you have me thinking, I need to double and triple check.

Because of business losses last year I can do my taxes the hard way and get about $8k back, or the easy way and get close to nothing back.
If the trustee would take it anyway, i'll opt the easy way.

[Flamingo]

During the years of your Chapter 13, your financial house is not your own but under the control of the trustee. Therefore, all tax refunds, raises, bonuses, lottery winnings, inheritances need to be reported to your attorney who will advise you accordingly. Your attorney will advise you what to do if/when you receive a refund during any year of your Plan. That's a lot of money to get back in a refund...you should adjust your withholding and put that money in your pocket during the year instead of giving it to Uncle Sam to hold for you and repay without interest. You will probably find out during your Plan that you will be in a position to probably not be able eto itemize as you may not have enough deductions to go over the standard deduction.

[klandsb]

I called my Attorney yesterday to question my income tax refund. He stated in my district (western PA) you get to keep all your tax refund. YAHOO.... I was going to change my deductions so next yr I would break even but now I dont have to worry about that... SO, anxious to get my taxes done so I can start a emegency fund that is empty at this point....

[77ford]

Congrat's that's cool that you get to keep it.

[klandsb]

77ford. Congrats on completing your plan. It must be an awesome feeling !!!