Chapter 13 Missed income tax return on initial filing

[cz3ch]

Even though I submitted it to my lawyer my income tax return back in March was not included in my means/income. My original case was a Chapter 7 which just got converted to a Chapter 13 so we are resubmitting my expenses and means test. Can this be amended? What sort of worry should I have about this number not being included and/or forgotten in the original filing (which is now in conversion)? We meet next week to resubmit my numbers for Chapter 13 and make any corrections. Which is why I asked.

I'm really stressed out over this and my lawyer hasn't returned my correspondance. Could use some guidance.
Thanks in advance. I'm hoping this is my last question about all of this mess.

[cz3ch]

I'm sorry this should read. Chapter 13 missed income tax refund on initial filing.

Also do I even need to list this as a source of income since it was a refund for overpaid taxes from the year prior? I talked with an attorney friend of mine (not a BK attorney) who said it does not constitute as income since it was taxes paid and returned to me.

[justbroke]

I'm really stressed out over this and my lawyer hasn't returned my correspondance. Could use some guidance.
Thanks in advance. I'm hoping this is my last question about all of this mess.

There is no worry. When converting to a Chapter 13 you usually do a new Means Test which is on form B22C (rather than Form B22A). The calculation of your disposable monthly income (DMI) would be based on your income including 1/12th of your refund. Even if you missed it, the Trustee would run a spreadsheet and point out that you had "over withholdings" and suggest a new DMI amount.

This actually happens often and attorneys and debtors alike don't think about a "refund" (or, even an underpayment!). Trustees actually look for this and just demand that the Means Test and schedules are adjusted. The "tax" part is probably the most subjective and sometimes varying expense.

I'm sorry to go against your friend, but it IS income. It is considered deferred. The Trustees and BK code treat it no differently than you having placed the money into a bank account. Let me calibrate my "it is income" response some more. It is income if you didn't account for it in your calculations of your DMI. If you just took your paycheck and calculated your income and taxes from there, without consideration of tax refunds, then that amount that is refunded is in fact part of your income.

[cz3ch]

There is no worry. When converting to a Chapter 13 you usually do a new Means Test which is on form B22C (rather than Form B22A). The calculation of your disposable monthly income (DMI) would be based on your income including 1/12th of your refund. Even if you missed it, the Trustee would run a spreadsheet and point out that you had "over withholdings" and suggest a new DMI amount.

This actually happens often and attorneys and debtors alike don't think about a "refund" (or, even an underpayment!). Trustees actually look for this and just demand that the Means Test and schedules are adjusted. The "tax" part is probably the most subjective and sometimes varying expense.

I'm sorry to go against your friend, but it IS income. It is considered deferred. The Trustees and BK code treat it no differently than you having placed the money into a bank account. Let me calibrate my "it is income" response some more. It is income if you didn't account for it in your calculations of your DMI. If you just took your paycheck and calculated your income and taxes from there, without consideration of tax refunds, then that amount that is refunded is in fact part of your income.

I figured next week when we convert we would do a new means test and correct my expenses and income (from a previous post). I think I was more worried than anything that the income tax return was overlooked and how that would look to the court. I thought I was going to bankruptcy prison for forgetting something like this. This whole experience has been nothing but stressful and I'm hoping that after my meeting with the lawyer next week my questions can be answered and we can move forward with all of the data disclosed properly.

I didn't know about the tax refund being considered deferred. When we calculated the income we did so based off of paystubs and while I did make mention of a refund I noticed it wasn't included in the calculations. I was more worried than anything about it being omitted and having some charges or something brought up. I didn't realize the Trustee would point it out in case it slipped.

Thanks again for your reply.

[justbroke]

Yep, the tax refund issue is a normal and quite common thing that is overlooked. I don't think people -- and attorneys -- do it on purpose. This is why the Trustee has a "comparison" spreadsheet to look at your numbers versus "their" numbers. (At least in my District, they have a Means Test Analysis spreadsheet to compare the numbers.)

[cz3ch]

Yep, the tax refund issue is a normal and quite common thing that is overlooked. I don't think people -- and attorneys -- do it on purpose. This is why they Trustee has a "comparison" spreadsheet to look at your numbers versus "their" numbers. (At least in my District, they have a Means Test Analysis spreadsheet to compare the numbers.)

Yeah it seems like it's easy to overlook. I had the same problem with another item that wasn't included by my attorney even though I disclosed it. I'm having to correct that as well in next week's meeting where we redo the numbers and the means test for Chapter 13. A total headache and stressful beyond belief.

[justbroke]

Starting to sound more like the attorney and/or his/her staff didn't do their diligence and use more care in entering the information. in any event, it will not matter because you are amending the forms and converting to the Chapter 13.

[cz3ch]

Starting to sound more like the attorney and/or his/her staff didn't do their diligence and use more care in entering the information. in any event, it will not matter because you are amending the forms and converting to the Chapter 13.

Yeah, I was really rushed through the process and a lot of things weren't explained. Only after the fact did I have questions. I was most concerned with how the court would look at the amendments (which are not off by a lot including income/expense) considering I had previously filed 7. I guess it doesn't matter now that I'm converting to 13 and filing the corrections respectively.

I can't wait for this whole thing to be over. I've been frightened that any little mistake would land me in prison for fraud. I'm learning that's not the case and I need to have more faith and trust in my lawyer and the system.

[justbroke]

Little mistakes won't send you to prison. In typical fashion, the Trustee just says "please amend these and resubmit". That simple.

[cz3ch]

Little mistakes won't send you to prison. In typical fashion, the Trustee just says "please amend these and resubmit". That simple.

That's the thing I just thought that redoing the expenses in the new Chapter 13 and including the forgotten tax return and such were big things. That's what drove me mad. I really need to get a hold of myself. I've been stressing for days, losing weight, sleep, etc. I guess next week when I meet with the lawyer my fear will be finally put to rest.