UPDATE: 341 meeting today, audit on our paperwork

[welovedis]

I posted yesterday and received some helpful information and was able to breathe a bit last night and this morning.

We had our 341 meeting today and it seemed to go according to what we expected. The trustee was very nice and did ask a few questions about the house we bought last year, the car we sold (when we thought we could still keep the ball rolling) and how we spent the proceeds--even though we did provide this already.

The US Trustee did show up too, but we had already provided all the info they asked for last week. They did draft a new letter which our attorney got yesterday and he is sending me a copy to answer some additional questions. Everything seemed pretty straightforward.

The attorney did say that we were being "audited" because I was self-employed in 2007 and sometimes that raises a red flag, along with the fact that we did incur a large amt of debt last Sept d/t repairs on our home that had to be done (mold remediation, etc..). I asked point blank if he felt that something was going wrong or there was going to be a problem and he felt hat there was nothing out of the ordinary in our paperwork. He said sometimes it happens and not to worry.

They did adjourn us to 1/6/08 & the trustee wants to see a copy of our 2008 taxes when we file. I guess as long as we provide all the info they are seeking we should be fine.

Thanks again to all who answered last night!

[dr618]

Good luck to you. I'm just trying to understand, if your next date is 1/6/08, how would you have had your taxes filed by then if you are self-employed? Wouldn't you have to wait for any 1099s?

[welovedis]

I was self employed in 2007, not this year, sorry for the confusion.

He was saying that to each party present, that he wants to see their 2008 taxes after they file.

DH & I do have to wait for our tax paperwork but the trustee did not make it sound as if they were waiting for it, just that when it got filed he would need to see it.

[ready2puke]

I wonder do they audit all self employed people? Geez now I'm worried

[dr618]

Thank you for the clarification. I was wondering because I just became self-employed end of 2007, and I am worried they are going to ask for lots of documents because of that. No way did I make a lot of money, still don't, and my total debt is somewhere around $8,000. What state are you in?

[yellowstone]

sometimes even people who don't cheat on their taxes get audited.

i heard they were starting a similar program to try and deter bankruptcy fraud. sorry that you have to go through the extra worry, but keep your chin up.

it wouldn't surprise me if self-employed were a red flag, much easier to hide income with your own business. however, given the number of self-employed people in the country there's really no way to audit all of them. my advice based on defending tax audits is to organize your paperwork and be ready to document everything you put on a form and if in doubt, tell the truth.

[welovedis]

I'm in NY, Western district court.

And the audit is really more questioning about deposits made after my self-employment ended, because they are trying to make sure we aren't hiding addt'l income (that's what I assume and my attorney said as well).

Some of the other questions they posed have more to do with specific items on bank statements--asking where certain deposits came from and they thought we took a trip somewhere recently before filing but we actually helped someone pay the deposit on the trip by allowing them to use our bank card to make the deposit (they have no CC). We can show a subsequent deposit in our checking account for the same amount on the day after the charge was made so we can prove that we didn't take the trip.

It is some things like that they are auditing, probably because they are making sure we aren't committing some kind of fraud. I have paperwork to back everything up so that is helpful to us.