Discharged - but atty wants 2007 tax returns to turn in to Trustee?

[ilovemycaitybug]

Hi everyone! It's been a while since I've checked in... sorry! I hope everyone's been doing well and that many a discharge has been made!

I have a question about a letter I received from our attorney last week. It said that since our case was filed in 2007 that he will need our 2007 income tax returns to turn in to the Trustee!?!? We were discharged 7/10/07 and FINALLY closed 8/27/07 . My Trustee determined our case to be no asset, and has been discharged per the Case Closed notation on PACER. The letter said they may want to keep any refund we may have!?!? How is this possible? Is this typical? I thought we were done .

Any ideas or experiences? TIA!

[keepmine]

Filing in the 3rd qt of the year and later, it's a good bet that the trustee will want a portion of your tax refund. Those funds are the property of the bk estate. All you can do is comply.

[thewife]

Hearing this really worried me alot. We use our tax refund every year for home improvements and we had planned on using our tax refund to put up new gutter spouts outside our house ( the ice storm this year tore them down, and now our basement leakes ). My cousin who had her 341 in July said that she had to wait 6 months after her meeting to do her taxes or else they could to take her refund. I am hoping that we file soon so I can wait the 6 months to do my tax refund so they wont take it. Not sure if it wouldl even work. I paid off my Lawyer 3 weeks ago and I am still waiting for them to file Hopefully it will be soon!!!! I want to get this behind me.

That really sucks about your refund, I feel for you!

[CindyLou]

The good news is its not to late to change your withholdings to make sure don't get too much of a refund!!! Make sure you are not giving Uncle Sam an interest free loan!!

[lrprn]

Unfortunately waiting to do your taxes for six months after discharge is no guarantee the trustee still won't ask for a portion of the refund that matches your case filing to closing months eventually. After filing and before closing, your trustee is the owner of your bankruptcy financial estate, not you. That makes your trustee able to take any portion of your tax refund that is associated with the months your estate is under his/her control.

For example, we filed Ch 13 in June 2006 and in May 2007 our trustee requested 42% of our refund for 2006 since that's the % of our tax refund earned between June 1-Dec 31 2006.

Here's yet another reason during bankruptcy to adjust withholdings to get back as little as possible. Here's the IRS booklet to help you do that - http://www.irs.gov/pub/irs-pdf/p919.pdf . Bottom line is Uncle Sam makes a lousy savings account. Better to keep the extra yourself and save it for yourself and your family, not your trustee.

Of course, some people are extremely fortunate and get a trustee who couldn't care less about your refund. Here's hoping you and everyone else here gets one of those! But even if you don't, change your withholdings so you get very little refund and then the trustee gets very little or nothing. It's perfectly legal to do this. Always check with your lawyer if you are uneasy about it.

[mattson06]

ilovemycaitybug

hang in there,it seems to me that,in a no asset case. there can't be anything for them. it took all my refund to file back in april and then some. it's been proven in court and filed by your attorney no assets. and accepted by trustee to file it a no asset case as well.Then case closed. after they review they shouldn't find anything against your case. i 'm on your side cheering you on. be strong friend. i'm sure it will work out. by the way good to hear from take care keep us up to date.

[colleenbean]

worried

i am worried with these posts about saying the trustee needs the 2007 tax return. The reason i am worried is that I am going to file 7 in Oct and I am below the means test for Massachusetts-but with my job there is potential for a year end bonus in Dec of this year and that could put me over the means test amount. Any ideas about this thanks!

[lrprn]

i am worried with these posts about saying the trustee needs the 2007 tax return. The reason i am worried is that I am going to file 7 in Oct and I am below the means test for Massachusetts-but with my job there is potential for a year end bonus in Dec of this year and that could put me over the means test amount. Any ideas about this thanks!

CB, since the bonus comes after you file Ch 7 in October, it won't count as income to your bankruptcy estate. That was established looking back six calendar months from the date you file in October. Check with your lawyer to be sure but you shouldn't worry about your December bonus - it's safe.

[thewife]

I am filing alone without my husband and I make only $7,000 per year ( I know, not much ) can they take all the money from the taxes even if I am the only one filing? Not sure if that makes sense or not.

[lrprn]

I am filing alone without my husband and I make only $7,000 per year ( I know, not much ) can they take all the money from the taxes even if I am the only one filing? Not sure if that makes sense or not.

If you file alone, then your trustee does have a right to your portion of the tax refund that comes from your income (although that doesn't mean he/she will take it). Your husband didn't file, so his portion isn't a part of your bankrutpcy estate *unless* you live in a community property state. Talk to your lawyer about this to see where your refund for this year stands next year and if your trustee is one that does take refunds.

[ilovemycaitybug]

Filing in the 3rd qt of the year and later, it's a good bet that the trustee will want a portion of your tax refund. Those funds are the property of the bk estate. All you can do is comply.

I filed in March... That's why this is blowing my mind. My attorney didn't mention anything about 2007 returns when we filed. I mean, I guess there's nothing I can do, but it seems that if we received the discharge and case is closed, why would the even want to bother? How can they, really?

[ilovemycaitybug]

hang in there,it seems to me that,in a no asset case. there can't be anything for them. it took all my refund to file back in april and then some. it's been proven in court and filed by your attorney no assets. and accepted by trustee to file it a no asset case as well.Then case closed. after they review they shouldn't find anything against your case. i 'm on your side cheering you on. be strong friend. i'm sure it will work out. by the way good to hear from take care keep us up to date.

Hey there! Thanks... I hope you're right. We really count on the refund each year, that's why we both claim 0. True, it's an interest-free loan to the government but I don't mind as long as I can count on that refund at the end of the year!

[danaf]

I know it sucks but I'd be ok with giving the trustee my entire tax return (which generally isn't more than 1k) in return for being able to discharge thousands......

[lrprn]

...it seems that if we received the discharge and case is closed, why would the even want to bother? How can they, really?

Usually when the trustee is interested in your return, they will leave your case discharged but not closed. Since your case closed, your trustee may have decided it wasn't worth the effort to get his/her portion of your refund. Check with your lawyer....you are probably in the clear.

[ilovemycaitybug]

I know it sucks but I'd be ok with giving the trustee my entire tax return (which generally isn't more than 1k) in return for being able to discharge thousands......

True, but I am simply concerned since my case is CLOSED.