Income Tax Refund Questions

[Lissy]

I typically receive a refund on my taxes each year. It's usually between $1500-$2000. When I filed my 13, my attorney told me I would most likely have to surrender my tax refunds to the trustee. However, my order of confirmation says nothing about tax refunds or even submitting tax returns.

I'm still confused as to how this works. If I were required to surrender them, shouldn't it have been specifically called out in the confirmation order? If not, then is it just at the TT's discretion? Will I receive something from the TT requesting my tax return and/or refund? Does the IRS automatically send any refund to the TT or would it come to me first?

I'm not holding out hope I'll be able to keep my refunds. But the answers to those questions will affect how quickly I jump on filing my tax return. And I just want to know what I need to do differently this year, if anything. TIA!

[FishersMike]

What you need to do is increase your exemptions so your checks are more and get small tax refunds

[Lissy]

Well, I'd rather fly below the TT's radar than risk getting in trouble for changing my exemptions now. Plus, the only time I ever did that, I ended up owing at the end of the year. I don't want to risk that either.

[FishersMike]

I'm sorry I did not know that we couldn't adjust our exemptions (I have not filed yet so do not know all the rules) -- but I do know you can go to the IRS website and put all your information and it will tell you what amount you should claim to basically "break-even" -- see I did not think having your deductions to what the IRS suggests would be breaking the rules....

[Lissy]

It's not if you do it before you file. But then that money increases your DMI and will be taken by the TT anyway, unless you can find some legitimate expenses to offset it. I don't think I could go in now and adjust my withholdings so I get more money in my paycheck. If the TT got wind of it, I don't think it would go over well.

[newbie2]

I'm sorry I did not know that we couldn't adjust our exemptions (I have not filed yet so do not know all the rules) -- but I do know you can go to the IRS website and put all your information and it will tell you what amount you should claim to basically "break-even" -- see I did not think having your deductions to what the IRS suggests would be breaking the rules....

As always, each district and each confirmation order is different. In my case it states on our confirmation order that we are to send in all tax refunds AND to not alter our withholdings in any way during the plan. Michigan is much stricter in many things, and your mileage may vary in your district. Just be sure to check with your attorney when it remotely concerns your financial house during the plan. That's the only way you can be assured that you are doing things correctly.

[momofthree]

We're allowed to adjust our withholdings after filing. Thank goodness too, because we were still listed as "exempt" when we filed. Now we're at married & 8. We'll probably owe this next year since we were exempt for most of the year, but hopefully we'll break even in future years....

[TheFalcon]

I recently filed in south carolina a couple of months ago. My lawyer told me that the trustee doesn't care about anything on tax returns. Its all mine. If i owe, im responsible to pay, if i get a refund, yay for me. all the trustee cares about in S.C. is if you make your monthly payments on-time.

If this process is a state to state thing, then, this is about the only benefit to living in south carolina...