Is tax refund in FL exempt?

[tanyusik]

I've been reading several threads from FL residents wondering how they can spend money from tax refund prior to filing, so they don't have to give it to the trustee.
According to the information I obtained in my search 100% of Tax refund in FL is exempt in Chapter 7. Meaning one can keep it and doesn't have to spend all of the refund prior to filing.
Am I correct?

[fltoo]

I used this site a lot for info.

http://floridaassetprotection.blogs.com/alperlaw/2007/01/index.html

[justbroke]

According to the information I obtained in my search 100% of Tax refund in FL is exempt in Chapter 7. Meaning one can keep it and doesn't have to spend all of the refund prior to filing.
Am I correct?

I don't know where you read that.

Your income tax refund is not exempt, by default. You would have to find an exemption for it using the available Florida Bankruptcy Exemptions (F.S. 222.25).

If you have to get the refund prior to filing, then spend the refund on things necessary to support your family. Get groceries, have medical care performed, buy clothing.

Otherwise, your attorney will need to find some room within the exemption system to exempt the refund. If you own a home, and are not surrendering it in the Bankruptcy, the likelihood that you'll be able to exempt the refund, diminishes quickly.

[tanyusik]

That's exactly where I found it. Florida statue 222.25(3)

http://www.flsenate.gov/statutes/index.cfm?mode=View%20Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=222.25&URL=CH0222/Sec25.HTM

Many other sources indicate that federal tax refund in FL is 100% exempt in BK under 222.25(3).
So all this is wrong and I'm gonna loose all my tax refund in BK?

[fltoo]

That is referring to the EIC.

File your taxes and spend the refund on essentials, then file for BK.

[tanyusik]

Thanks a lot. I was planning to file BK tomorrow, but got your advice just in time to prevent a mistake.

[justbroke]

That's exactly where I found it. Florida statue 222.25(3)

http://www.flsenate.gov/statutes/index.cfm?mode=View%20Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=222.25&URL=CH0222/Sec25.HTM

Many other sources indicate that federal tax refund in FL is 100% exempt in BK under 222.25(3).
So all this is wrong and I'm gonna loose all my tax refund in BK?

What you posted has to do with certain taxes explain in the IRS Manual

Florida Statue 222.25(3) A debtor's interest in a refund or a credit received or to be received, or the traceable deposits in a financial institution of a debtor's interest in a refund or credit, pursuant to s. 32 of the Internal Revenue Code of 1986, as amended. This exemption does not apply to a debt owed for child support or spousal support.

Specifically, it's Section 32 which deals with the Earned Income Credit.

Sp. as I wrote earlier, just get your taxes, and spend it on your living costs.

[sophia]

Hi there, I retained a lawyer last month and he told us to buy medicine, get the dog it's shots, fix our cars, get tires, stock the pantry, get diapers, formula,get cars appraised, paper towels, cleaning products, baby food, diaper, pull-ups, etc..

He said we have $1000 each (husband and I filing together) personal property, $1000 each for each car, and $4000 each wild card. A total of 12k to use for exemptions.
We just got back a hefty income tax check and are trying to spend 90% of it on things that our lawyer has said is okay. We got back over 5k and spent
2k between Costco & Wal-Mart.

We are trying to fit all our household items, the 2 cars (both old and used & paid for) approx $1500 in stocks, and whatever we have left from the refund in our bank account the day we file.

[justbroke]

I almost forgot... spend it on your lawyer and filing too.

[siestaguy]

Justbroke, thank you for answering this question by explaining (and providing the actual language of the Florida Statute) that the exemption is only for the Earned Income Credit (which seems fair and reasonable). Before reading your response, I searched the internet for an hour to find out if there was any limitation on Federal income tax refunds. If there were no limitation, that would be easy to game by intentionally overpaying withholding or estimated taxes, effectively having the IRS hold the money temporarily.

[justbroke]

JIf there were no limitation, that would be easy to game by intentionally overpaying withholding or estimated taxes, effectively having the IRS hold the money temporarily.

Exactly! Yet, people try it all the time. Most United States Trustee (UST) offices are smart to this and review tax returns for "average" refunds!

[tcreegan]

Hi tanyusik,

Florida does have some exempt places to put money....

222.22 - Prepaid hurricane savings accounts, prepaid medical savings account deposits, and prepaid college education trust deposits.

Need to ask an attorney if throwing big chunks in there right before a BK is legit.....

Good luck w. your filing,

Tom in Colo