Tax Refund and over median

[getouttathehole]

I adjusted our withholding and we are still getting a big refund. We are already over median so should I even bother filing before we file bankruptcy and trying to spend it on necessities? It will be added to our income correct? We usually would just pay down bills with it anyway but it still seems to hurt a little to possibly give it to the trustee...although it would be a very small price to pay to do a 7.

[keepmine]

You are asked for your gross income on the means test so, any refund is accounted for.
I'd ask my attorney if state exemptions would cover the refund or,if trustees in your district will claim the refund as property of the bk estate.
If there is danger in losing it, I'd not file bk until had the return in hand and spent it on necessary items, health care, auto/home repairs, legal fees,etc.

[CindyLou]

I think the bigger issue here is NOT whether the OP will lose the refund, but if they refund will keep her filing a 7 altogether!! If it will bring you over the median, then don't file until after the BK....worse that can happen is that the trustee will take it from you then, but at least it won't be counted in your income and you will still be able to do a 7!

[monkatom]

If it will bring you over the median, then don't file until after the BK

I did not think tax returns were included in the meduim income test as they were already accounted for in the 6 month gross payroll figures?

[dp1969]

I don't remember the income tax in the means test, either.

We asked our attorney about the tax refund we will have coming (2007) and he didn't want to hear it. We've filed BK but never stated we would have anything coming in (don't know if we will).

Should we wait to file our tax return until after our 341? I don't want anyone getting there hand on that money.

[jp2861]

I think the bigger issue here is NOT whether the OP will lose the refund, but if they refund will keep her filing a 7 altogether!! If it will bring you over the median, then don't file until after the BK....worse that can happen is that the trustee will take it from you then, but at least it won't be counted in your income and you will still be able to do a 7!

The tax amount has been subracted from the gross so it won't be added on top again. Tax is not additional income earned. The income was earned one time, taxes taken out, end of story. Whatever the gross amount on the paystubs says is the amount used. Taxes are just not a player in computing gross. It becomes part of the estate asetts, though.

[tay666]

The tax amount has been subracted from the gross so it won't be added on top again. Tax is not additional income earned. The income was earned one time, taxes taken out, end of story. Whatever the gross amount on the paystubs says is the amount used. Taxes are just not a player in computing gross. It becomes part of the estate asetts, though.

What about earned income credit?
That is something the governement sends on top of what you paid in taxes.

[CindyLou]

ummmm.....in some cases districts are considering it in the 6 month figure! I can name eastern district of louisiana as one example.

[lrprn]

ummmm.....in some cases districts are considering it in the 6 month figure! I can name eastern district of louisiana as one example.

If true, then the eastern district of LA is double-dipping these filers unfairly. An income tax refund is simply returning money the filer already earned in gross income that was left over after paying federal taxes. It isn't extra new income.

A filer with a good lawyer needs to challenge that practice in that court district and stop it!