Do we have to tell our tax preparer we filed?

[needanswers]

I'm just wondering how we need to to our tax preparer that we filed. If so, why? We're stripping our 2nd and we usually write off the interest on that.

[Flamingo]

Since your usual interest deduction for your second mortgage will be eliminated, your prepare will notice that when compared to your previous returns. That is, if you use the same preparer each year (person). Also, usually when in a Chapter 13, many past donations, etc. one used to make are eliminated and many deductions go by the wayside. You will need to adjust your tax withholding accordingly if in the past you relied on tax deductions to reduce your taxes.

Note, nothing from your BK as to fees, costs, etc. is tax deductable.

[needanswers]

Oh bummer! We do use the same person every year and we have mutual friends (that I do not want to share our 13 info with) but I hope that she would be professional and discreet.

We always wrote off a lot of stuff due to my DH's job and made quite a bit of charitable donations. We did adjust our withholdings so hopefully the return will be appropriate for that. It will be hard paying property taxes without the help of the tax return but we'll figure it out.

What do you mean that many deductions are eliminated and go by the wayside?

Since your usual interest deduction for your second mortgage will be eliminated, your prepare will notice that when compared to your previous returns. That is, if you use the same preparer each year (person). Also, usually when in a Chapter 13, many past donations, etc. one used to make are eliminated and many deductions go by the wayside. You will need to adjust your tax withholding accordingly if in the past you relied on tax deductions to reduce your taxes.

Note, nothing from your BK as to fees, costs, etc. is tax deductable.

[LadyInTheRed]

Oh bummer! We do use the same person every year and we have mutual friends (that I do not want to share our 13 info with) but I hope that she would be professional and discreet.

If you don't absolutely trust this person to keep all of your financial information, including the BK, confidential, you should go to somebody else. I'd say that even you weren't filing BK.

We always wrote off a lot of stuff due to my DH's job and made quite a bit of charitable donations. We did adjust our withholdings so hopefully the return will be appropriate for that. It will be hard paying property taxes without the help of the tax return but we'll figure it out.

When you pay your mortgage every month, put 1/12 of the property taxes aside so the money is there when the tax is due. If you don't trust yourself to do that and leave the money alone, call your mortgage company and ask if you can set up an impound account so the taxes are part of your mortgage payment. I don't know if they'll set that up while you are in BK, but it won't hurt to ask.

What do you mean that many deductions are eliminated and go by the wayside?

I'm pretty sure she means that since a lot of people in Chap 13 strip a 2nd and stop making charitable deductions, they no longer have the tax deductions. If you don't take that into account and adjust your withholdings, you could have a surprise a tax time.

[momofthree]

We told our tax preparer, and she said "you and everybody else, I feel so bad for all you guys" (referring to dh's profession). She didn't miss a beat and didn't seem to think poorly of the decision at all. If anything, she made me feel better about it.

[needanswers]

You're right, LadyInTheRed. I'll have to talk this one over with my DH and decide if we should find another tax preparer. We've been with this person for over 10 years so it's hard to switch around.

Our property taxes this year are $6000 (ouch!) but at least it's down from the $8000 in previous years. I did the math and it looks like have to set aside $500/month just for the taxes. Coming up with an emergency fund has been such a challenge.

If you don't absolutely trust this person to keep all of your financial information, including the BK, confidential, you should go to somebody else. I'd say that even you weren't filing BK.

When you pay your mortgage every month, put 1/12 of the property taxes aside so the money is there when the tax is due. If you don't trust yourself to do that and leave the money alone, call your mortgage company and ask if you can set up an impound account so the taxes are part of your mortgage payment. I don't know if they'll set that up while you are in BK, but it won't hurt to ask.

I'm pretty sure she means that since a lot of people in Chap 13 strip a 2nd and stop making charitable deductions, they no longer have the tax deductions. If you don't take that into account and adjust your withholdings, you could have a surprise a tax time.

[needanswers]

Yeah, I'm thinking we aren't going to be alone in this one. My DH's profession has REALLY taken a hit in my state, too!

We told our tax preparer, and she said "you and everybody else, I feel so bad for all you guys" (referring to dh's profession). She didn't miss a beat and didn't seem to think poorly of the decision at all. If anything, she made me feel better about it.

[Billssuck]

I've professionally prepared taxes in the past and most of us won't think bad of a person for being in a chapter 13. Many people have many changes from year to year in their taxes and this shouldn't be a big deal. Believe me, there are ALOT of people who try to abuse the Earned Income Credit by swapping kids around each year...now those are the people I think poorly about.

If you look at my signature info, I have alot of changes in my taxes for next year myself with surrendering my home. I just made a dumby tax return up for this year with my anticipated income and deductions (without my mortgage interest), and adjusted my withholdings accordingly.

Good luck to you!