Payroll Taxes for means test

[fyrace]

I have read several conflicting things and can find little regarding searches on the internet. For the means test you deduct payroll taxes. I have read three different things:

1) You deduct actual withholdings and let the trustee figure out if you are overwithholding

2) The trustee will take last years refund, divide by 12 then reduce your payroll expense by that much,

3) then the third had some weird formula: tax last years tax from 1040, divide by 12, the mulitply by 7.65% to add on?????

Then I read a sliding scale for whether you get paid weekly, biweekly, monthly...aggghhhh.

Just trying to see if anyone has ever been question for overwithholding or how their trustee/atty guided you. I am an over median wage earner in Florida and am pretty sure I pass the means test either way, but I want to minimize the scrutiny anyway.

Any thoughts?

[laurannm]

What we did and what seemed to be the most popular answer was to take a look at the actual tax owed from your most recent tax return (so your taxes withheld minus the actual tax owed is your refund if you got one) and divide by 12.

Don't forget you can also include excise and medicare taxes as well (medicare you can get right off your pay stub. Cannot include property taxes however

[EricaCallaha]

We just pulled right off the pay stub. No issue. It is what it is. We have to turn over all tax refunds in excess of $1000 anyway. He gets his money either way. I would hate to think that the trustee thought that I was over/under withholding and intended to give me tax advice....which they are not qualified to do. Our lawyer just told us to adjust our withholdings after we figured out that we were going to get a large refund. He couldn't advise us what to set it to as that is between you and the IRS. But go to the irs.gov website and do their withholding calculator and that will tell you about where you should be.

The trustees are going to look at it, but not that close.

Good Luck.

[fyrace]

I increased my taxes at the turn of the year because I am going to lose my home and didn't want to get killed in taxes, so it is higher than should be. I also took last years refund and split, 2000 to me (which I claimed as income) and the rest to next years taxes, again because I am losing a lot of deductions. I wonder if the trustee is going to make me claim the deferred refund as income, since I never received it.

[jennordhavn]

I used actual taxes withheld (just added them all up from 6 months of paystubs).

[laurannm]

Whether or not you can use withholding right off of your paystubs depends on whether or not you get a refund every year. If you typically break even then yes you can use what it is on your paystub. But if you typically get a refund, then using the withholding is NOT correct, since the means test calls for the actual tax owed (getting a refund means you are withholding more than you owe). And trust me, for a Ch 7 case, the UST will most definitely look at this number and verify that it is correct.

It is possible that some districts allow you to use withholding regardless, but it is rare