Why is there different answers about tax return on means test?

[deadbroke99]

I have seen people answer on this board that your tax return does count as income on means test and I have also seen others say it doesn't. Which is it??? Is it trustee specific, state specific??

[laurannm]

In the majority of areas, tax refunds are not considered income, since you are using your gross income over the past 6 months. If you are above-median and this filling out the rest of the form, line 25 (I think) asks for ACTUAL tax obligations (not just what is withheld from your check).

However, there was at least 1 member on here whose district did count tax refunds as income. Your best bet would b to check with your attorney if you are using one

[Help!]

That would be me.

The way it was explained to me is that if it was something that would be counted on your tax return as income received (which a previous year's refund would be), it should also be counted as income on the means test. I think it is case-specific, and extremely unlikely if you're below median.

[TooMuchCredit]

That would be me.

The way it was explained to me is that if it was something that would be counted on your tax return as income received (which a previous year's refund would be), it should also be counted as income on the means test. I think it is case-specific, and extremely unlikely if you're below median.

Only a STATE tax refund is counted as income on your federal return. You don't count your federal tax refund the next year as income.

If they are saying you need to count your federal refund as income they are wrong.

[Help!]

Our federal refund (not just state) was counted as income also, even though it isn't something that would be reported on income taxes. The UST can include "money received from all sources" in the six months prior to filing as income and leave it to the debtor to rebut abuse.

[justbroke]

Only a STATE tax refund is counted as income on your federal return. You don't count your federal tax refund the next year as income.

Exactly!!! Only refunds of State and Local Taxes are considered income for Federal (IRS) Income Tax purposes. This is to prevent double taxing.

For those who don't do taxes all the time, the IRS allows you to deduct, if and only if you are itemizing, your State and Local taxes from your income, in order to determine your Federal Tax liability. If you are refunded part of that money, then that deduction wasn't warranted.

That's why, on the following year, and if and only if you itemized the prior year, you must declare that refund (1099-R) on your Federal Return.

I will caveat my post, however, that 11 USC 707 reads that it's income from all sources, taxable or not... so...

[justbroke]

Our federal refund (not just state) was counted as income also, even though it isn't something that would be reported on income taxes. The UST can include "money received from all sources" in the six months prior to filing as income and leave it to the debtor to rebut abuse.

Your UST is one who has read the BK code and probably some caselaw on this matter. It is interesting, though I don't agree totally, but see the issue. They are trying to prevent over-estimating of the tax liability on the means test, versus a tax refund.

I just haven't heard of many challenging that in my District. Some USTs ahve been there since 1992 and still are old school and want Schedule I, J and Form B22A/C (the means test) to all match.

[TooMuchCredit]

Your UST is one who has read the BK code and probably some caselaw on this matter. It is interesting, though I don't agree totally, but see the issue. They are trying to prevent over-estimating of the tax liability on the means test, versus a tax refund.

I just haven't heard of many challenging that in my District. Some USTs ahve been there since 1992 and still are old school and want Schedule I, J and Form B22A/C (the means test) to all match.

I guess if you count it as income, they also have to allow your actual withholding, you are going to end up with a DMI that is unrealistic unless you adjust your W-4 exemptions.
If they don't allow your actual withholding, You will end up with an unaffordable payment.

WAIT... I bet they do it differently with a Ch. 7...I am CH. 13 mode :-) sorry! It make sense to me for the CH. 7 means test.