Question about household income and dependents.

[awafan]

I have two adult children, 19 and 21 years old, who live with me and are college students. They are dependents on my income tax forms. They don't pay any rent and are both working part-time. Are their incomes counted as part of the household income for chapter 7 purposes? With only my income I pass the means test. With their incomes included I don't pass the means test.

[justbroke]

This is my understanding.

Under the definition used for "current monthly income" (CMI) and the Means Test, the debtor's CMI consists of all regular income of the debtor plus their spouse, whether or not the spouse is filing jointly. There is a "marital adjustment" that can be made for the non-filing spouse to protect certain income (but not necessarily all of the non-filing spouse's income).

Bottom line is that your child's income would never count as your "income."

However, if they contributed to the household expenses, or paid for a vehicle included in a hypothetical Chapter 13, you would have to reduce your expense by the amount that they contributed. In your case, they don't contribute to anything.

If you were over-the-median without their income, some United States Trustees (USTs) may try to poke at the expenses and the educational status of your adult children. You are not over-the-median so I don't think you'll get into that tug-of-war with the UST. But let me say this anyhow; if you have adult children that are under 26 and in school then you have the argument that they are still dependent on you.

(I had to argue this issue with my Chapter 13 Trustee because my adult stepson was 22 years old and I included him as a dependent along with his 14 year old brother. The Trustee flat out asked "when is he graduating?" I responded, "It seems that we both have the same question." And that was that. Took him eight years to graduate. The joke around here is that he would say, "Many people spend 8 years in college." I would retort, "Yes. They are called doctors.")

[awafan]

Thank you for the information.