Tax refund but still owe on previous year

[lillymarlene]

I have not been posting that much lately since my boyfriend has been in the hospital for emergency surgery.

I have been searching threads, but have been unable to find anything like this exactly. Then I just came back from my accountant, and this year I should be receiving refunds from the IRS and the state. For 2010, I ended up owing the IRS about $2,000 and the state about $300. I'm in an "informal" payment plan with the IRS, making monthly payments. I'm also in a payment plan with the state.

Last year my attorney told me it was best to make a plan with the IRS, rather than ammend my plan. He said it wouldn't look good that the unsecured creditors get nothing, and since the plan was already confirmed, I'd need a new 341, etc.

My question is do I probably just get to keep this refund or does it automatically go to the IRS? I noticed on another thread here, that the IRS couldn't request payment from someone in an active ch-13, but would this apply to a payment arrangement made outside of the ch-13 plan?

Of course I sure could use that refund :-) I have lots of upcoming car repair, dental work, etc.

[AngelinaCat]

I hate to say it, but you won't be getting that refund check. Your refund will be applied to what you still owe on the previous tax year. 'Hub and I are in a similar arrangement with our past taxes, and the last two years we were were due a refund, which the IRS applied directly to what we still owed.

Florida doesn't have a state income tax--yet! Thank Goodness.

[lillymarlene]

Thanks Cat, oh well...I was just hoping. Thought it was strange since I believed on one hand I couldn't have a payment plan, since I was in an active 13. Even my "personal IRS agent" kept saying to ammend my ch-13 plan. Then she later changed her mind, and said I could have an "informal" plan through her, over the course of 2 years to pay off the debt. Don't know if there is any difference between "official" or "informal" plans, though.

The refund on my state 2011 is larger than the amount still owed for 2010. Hopefully I'll get that back.

[AngelinaCat]

We had gotten the standard IRS, "we are going to garnish your wages" letter, so 'Hub called the IRS number and talked to a very nice person and they set up a payment plan. When we filed CH7 BK, this plan went into 'abeyance' for the duration of the Ch7. Then after the Discharge, we got a notice from the IRS that it was time to start the plan up again, which we did. We still have about a year and a half to go before we are through.

But we have seen President Bush's 2008 'Stimulus Check' go straight from one department of the IRS to another, and two years of 'nice' refunds go straight to our debt. Hopefully, you will get to keep some of your state income tax refund.

[lillymarlene]

But we have seen President Bush's 2008 'Stimulus Check' go straight from one department of the IRS to another, and two years of 'nice' refunds go straight to our debt. Hopefully, you will get to keep some of your state income tax refund.

Thanks for the reply. Last year I had gotten the standard letter, "Your chapter 13 may be dismissed, unless you pay in full..." So I immediately called the IRS and later arranged a payment plan. I guess I'll probably soon be getting a letter that my refund will be going towards 2010's taxes. (At least the old balance will be getting smaller.)

[AngelinaCat]

I guess I'll probably soon be getting a letter that my refund will be going towards 2010's taxes. (At least the old balance will be getting smaller.)

Yes, you will. We have, and it very gratifying to see our debt shrink.

How is your BF? I hope he is on the mend.

[lillymarlene]

Yes, you will. We have, and it very gratifying to see our debt shrink.

How is your BF? I hope he is on the mend.

Thanks for asking. He had emergency surgery for divertiulitis, and he seems to be slowly getting better.