Tax Refund-Missouri

[kakdbass]

We are in 100% pay back plan over 60 months. Actually, since the majority of our unsecured debtors didn't file claims we will be finished paying off about six months early. Our confirmation order did say we would have to turn over any tax refunds and we do have past due federal taxes included in our plan. My question is, will the IRS automatically intercept the refund or will the trustee divide amongst the creditors as he does our regular monthly payments? Also, has anyone had success keeping all or a portion of their refund in the state of MO? I have no problem with the money going to creditors because that just means an earlier payoff, but having a little extra money in savings would be nice too.

[lrprn]

This would be a good question to ask your lawyer. He/she is the best reliable source of information about what to expect if you qualify for an IRS refund while your plan is active and how the IRS will handle it.

Frankly the best thing to do is to adjust your withholdings to ensure you only get a small refund (less than $500) every year. This is likely to give you more money on every paycheck throughout the rest of your 13, and you don't have to worry about what your trustee or the IRS is going to do.

[kakdbass]

Actually, we have adjusted my husband's withholdings so that hardly anything comes out for taxes. It's job related expenses (hubby works in the transportation industry), mortgage interest, medical expenses, child tax credit, etc. that gets us a bigger refund. And our attorney and his entire staff are worthless as I've mentioned in previous posts. Takes them weeks to reply to emails, can't get anyone on the phone, never return messages, get us mixed up with other clients, but I digress. I'm not asking for legal advice, just for other's insight that have filed in MO and dealt with our trustee.

[occi]

I have been looking for similar information. I am 2 years into a Chapter13. Is it ok to change your witholdings AFTER your plan has been confirmed?
I am in Oregon. I get a large tax refund, and need to increase my witholdings. Thank you.

[lrprn]

Is it ok to change your witholdings AFTER your plan has been confirmed?

It depends on your trustee. Some allow changing withholdings after filing and some don't. You'll have to ask your bk lawyer to know which side of the fence your trustee is on regarding changing withholdings after filing.

[occi]

Thank you for the quick response. This site is great.

[newbie2]

I have been looking for similar information. I am 2 years into a Chapter13. Is it ok to change your witholdings AFTER your plan has been confirmed?
I am in Oregon. I get a large tax refund, and need to increase my witholdings. Thank you.

Definitely ask your attorney, and also take a look at your confirmation order. Mine (in Michigan) stated right on the confirmation order that we were to do nothing to alter our potential income tax refund.

[kakdbass]

Well, found out that even though we are in a 100 % repayment over 60 months, that we still have to surrender all of our refund except $600. The paralegal also stated that we can't file a 'motion to incur debt' and a 'motion to retain part of our refund' at the same time. My thoughts were that we could use a portion to pay sales tax/tags, replace tires on our other vehicle, and then send the trustee the remainder. We already have enough for the down payment on a new vehicle in savings. We also have enough in savings for taxes and tires, but it would have been nice not to have to dip into our savings further. Oh well, I feel very fortunate that we have been able to save (something we've never been able to do) and with our refunds going to our plan each year that we will be paid off much sooner than 60 months. : ) Learning more and more about this process daily.