Tax Question

[walkthaplank]

In my CH13 plan any tax refunds are pledged to the plan, however what happens if I owe additional state taxes? Can I use a portion of the Fed refund to pay those additional state taxes or do I just have to carve that out of my budget somewhere?

IE: I am due $500 back from the feds, but owe an additional $100 to the state. Do I just send the trustee a net check of $400 along with my returns showing the accounting?

[newbie2]

Pick up the phone and call your attorney, because I suspect that districts and practices may vary on this.

I'm in Michigan and have had the same thing happen the past 2 years. We've had to pay the State and the trustee gets the full Federal refund.

The way it was explained is this: On our original schedules we showed having to pay more in income tax than what was withheld. Because of this the Federal refund after our filing was actually additional income. The amount owed to the State was "normal" per our schedules.

[lrprn]

In our state we add up the fed and state tax refunds and taxes owed to see where the total finishes. Our trustee allows us to keep any money left over after paying taxes owed under $2K. We very carefully adjust our withholdings to ensure we always end up with less than $2K coming back when the dust settles. So far, so good.

The toughest part about taxes in Ch 13 is that trustee practices around them are so different across the country. I wish there was more consistency.