Income Tax

[jade73]

We're getting back $1600 Federal and $150 state. I turbo taxed my refund but found out today that its not going into my checking account it's going to the trustee and she will determine how much of it we can keep. We submitted an estimate today totaling $1400 to have my husbands truck repaired, it's been sitting for 3 months now, and alot of maintenance on my ten year old car. We may get enough to repair the truck but I'm not holding my breath.

My advise to you...Adjust your withholdings, don't let the courts have any of your money! I'm adjusting mine tomorrow.

Im in GA

[UpsideDownMI]

What did your confirmation order say in regards to tax return refunds? What is written in your confirmed plan and confirmation order will dictate the status of your refund.

[ccfriend]

Be careful with adjusting withholdings. My plan very clearly states that I have to have permission to change withholdings. I know that some people can do it without permission though!

[unearthed]

Here's some hopeful news: in Michigan it has become illegal for trustees to intercept tax refunds belonging to those in chapter 13:

http://www.det13.net/home.shtml

In Missouri, they already allow you to collect the funds by way of check or direct deposit. However you can't spend it until they give the go ahead (an irritatingly long process).

[Flamingo]

A tax refund is extra cash coming in during your Chapter 13 which could be distributed to your creditors over and above your confirmed plan. It does not belong to you but falls under the control of your Trustee. When a tax refund is expected, one should always consult with their attorney to find out what, if anything, needs to be done. What can help is if household or other repairs need to be done and the refund would help pay for those repairs. Having an estimate of the repairs that need to be done (i.e., leaky roof, bad tires, etc.) does help if you are trying to keep all or part of a refund.

[olivies]

A tax refund is extra cash coming in during your Chapter 13 which could be distributed to your creditors over and above your confirmed plan. It does not belong to you but falls under the control of your Trustee. When a tax refund is expected, one should always consult with their attorney to find out what, if anything, needs to be done. What can help is if household or other repairs need to be done and the refund would help pay for those repairs. Having an estimate of the repairs that need to be done (i.e., leaky roof, bad tires, etc.) does help if you are trying to keep all or part of a refund.

How is this handled when the IRS is the one likely to grab the refund because of tax debt (even though they are included in the plan)? Does it simply pay them off sooner? Do I need to make sure my trustee will make the calculation adjustments in the plan, because god knows we can't rely on the IRS to be forthcoming with the info and they would happily accept a few grand more than they were supposed to I'm sure.

[jade73]

Well the IRS didn't do much in the way of sending our refund to the trustee. I called the law office and told them that our refund was deposited into our checking account and what did I need to do and she was like If you absolutley
have to use it make sure you keep all your receipts. I was like..dang! Of course I will have to use it. I cant even make it from one pay check to another and they think that $1600 sitting in my bank account isnt going to get used....WOW!

[SVO351]

Loophole?

Ok, our attorney told us we can keep 1600 of it and the rest has to go to the trustee. We filed Chapter 13 in October so we already had a lot of taxes taken out for the year. We've since then changed our filing status (on request of our attorney).
But for this year though, we'll be getting back more than 1600.

My question is....can you defer tax refunds to the following year knowing you'll have to pay (based on changing our withholding amounts)? And if so, can I defer just the amount that leaves us with a 1600 dollar return which we can keep.

Is that legal?