Tax Refund Being Used for Next Years Taxes

[fyrace]

If I make the election to use this years tax refund to pay for next years taxes (to avoid any large liability from not paying mortgage interest in 2009), and I file and make that election before I file bankruptcy, can the trustee alter the IRS filing therefore "intercepting," if you will, this election forcing the refund to the estate instead of how I wish to have it used?

In essence I got a zero refund and no income counted against the means test, and still got to make use of refund, essentially. Is this allow or will there be big issues.

I have a legit use for it and it won't be claimed by me for the means test, but just curious how much authority the trustee has after I file (several months before bankruptcy).

I do not plan on getting a large refund next year.

[Trixie007]

Hmmm, that's a tough one. Might it be considered an asset as it is essentially a pre-paid bill? Idk. You get to deduct the taxes that are withheld from your paycheck, so maybe if this doesn't put you over on that you would be ok. Only a lawyer could tell you, and even then they might tell you that you'll just have to see what the Trustee says...

[HHM]

Conceivably, the trustee could force a change in the election because the refund is still part of your BK estate, it is still an asset that either needs to be spent or exempted. Since "next years" tax liability is contingent (unknown), you haven't really spent the refund by taking the election to have it applied to next years taxes.

Now, I don't know if they actually would force the change in the election, but there is no legal basis that I am aware of that prevents them from doing so.

If you are getting substantial refund each year, that begs the question of how you would qualify for a chapter 7? Second, you need to adjust your withholding (unless, of course you are sell employed, in which case you need to start making Quarterly Estimated Tax Payments, Form 1040ES).