Tax Refund and not yet comfirmed

[huffydogg]

I already had my 341 meeting, and everything went smooth. My comfirmation date is set for April 26, how do I know if my trustee will keep my tax refund? I always get a tax refund, last year I received $9000. I am in the Los Angeles area. Thanks in advance.

[enginegirl]

My 341 went without a hitch.... and then disaster...... my trustee divided my 2009 $6000.00 refund by 12 and added it to my payment.... (an extra $500.00 per month!!)... my refund this year is expected to be in the 1200.00 range, probably less... we had to fight her to make her realize this... still she bumped my payment by $100.00 per month.... I just had to adjust my withholdings so it will even out and I can afford the extra (with the permission of the trustee of course!).
hopefully this wont happen to you.......

That said every district and trustee is different, the best person to ask about this is your atty who should know what your trustee's rules are!

ps read this posting "Ah, tax season!" some really good info!

[justbroke]

I already had my 341 meeting, and everything went smooth. My comfirmation date is set for April 26, how do I know if my trustee will keep my tax refund? I always get a tax refund, last year I received $9000. I am in the Los Angeles area. Thanks in advance.

This mainly depends on how you treated your "average" tax refund when the Means Test (B22C) and disposable monthly income (DMI) calculation were done! A refund is nothing but an overwithholding and is income for the purposes of the Means Test and determination of your DMI.

In other words, most attorneys will take the average refund, divide it by 12, and include it as income on the Means Test. If your attorney didn't do this, you "may" be subject to surrendering that refund to the Trustee. This also depends on how the Trustee may have adjusted your DMI based on your actual witholdings versus your actual tax liability to calculate any over/under withholding that needs to be taken into account.

If you filed through an attorney, you should ask him if you'll need to surrender the tax refund if you receive it before confirmation. Otherwise, if you filed pro se and didn't factor the average refund, that refund may be property of the Estate.

[huffydogg]

My attorney says that the trustee will take my tax return, and since I am married , and spouse did not file, he recommends that we file seperately. That way my wife can get her refund. The question I now have is who claims our two children? I make more money than my spouse, but it will be in our best interest if she claims them so that she gets a bigger refund. Is this okay to do?

[justbroke]

Wait, you're in California and you're worried about a tax refund? If you have no real property (homestead) that you are protecting, you should be able to exempt "most" refunds under System 2. California Exemption System II (System 2) provides over $20,000 in exemptions!

You should be asking your attorney why it isn't exempted under System II. There may be a reason that you don't have enough exemptions left to cover a $9K refund, so it would be good to know.

[chicagoed195]

You should seek assistance from a tax professional to determine the merits of filing separate returns. IRS has some very specific rules on the allocation of income and deductions when separate returns are filed. You might find that separate returns do not produce the desired result. In addition, if your refunds are as high as you say they will be, you should immediately file a new W-4 with your employer to reduce the overwithholding.

[newbie2]

You should seek assistance from a tax professional to determine the merits of filing separate returns. IRS has some very specific rules on the allocation of income and deductions when separate returns are filed. You might find that separate returns do not produce the desired result. In addition, if your refunds are as high as you say they will be, you should immediately file a new W-4 with your employer to reduce the overwithholding.

Please be careful about giving that advice (bolded above). Depending on the state someone filed their petition, and the district, they may not be allowed to change their withholdings during the life of their plan. It is stated on our confirmation order we are not allowed to do so. If the trustee wants that money at the end of the year, then they are going to make sure they get it, and don't want withholdings changed to minimize their tax refund.

[chicagoed195]

Point taken.

I assumed that everyone has read the disclaimer on the log-in page that all of this information is just that and each and every one of us has an obligation to verify that a specific solution works for us.

I will be more careful in the future.

[whathehell]

My 341 went without a hitch.... and then disaster...... my trustee divided my 2009 $6000.00 refund by 12 and added it to my payment.... (an extra $500.00 per month!!)... my refund this year is expected to be in the 1200.00 range, probably less... we had to fight her to make her realize this... still she bumped my payment by $100.00 per month.... I just had to adjust my withholdings so it will even out and I can afford the extra (with the permission of the trustee of course!).
hopefully this wont happen to you.......

That said every district and trustee is different, the best person to ask about this is your atty who should know what your trustee's rules are!

ps read this posting "Ah, tax season!" some really good info!

wooo I got my 341 next week, I see we might be in the same location what is the first name of the trustee if you can...