For All Those Who Just Finished Your 341 Meetings & Taxes

[danaf]

If you did not or could not exempt your 2009 tax return in your petition then do not forget to increase your exemptions for 2009.

The trustees like to take tax returns. Taxes being paid out help on your schedules by giving you less monthly disposable income.

BUT right after your 341, increase those exemptions as much as you can so you get more back and it is less for the trustee to take in 2010. And they will take it if they can. But if you increase your exemptions, there's nada they can do about it and nada they can take.

The system sucks - you've just got to know how to play it.

[arami008]

I recently filed and exempted my refund for 1700. I used the wild card in california...can they still take it? I am unemployed currently and my husband is a temporary worker for now.

[danaf]

if you exempted it then no, they cannot take it. and good for you!

my post was meant for those who either didn't know they could exempt tax returns, or couldn't based on their allowed exemptions.

[anuta]

danaf--do you mean that if we file BK in Aug 2009 the Trustee will claim our 2009 return, unknown and unfiled until April 2010?

[JoeBankrupt33]

Anuta,

Yes, the trustee can take a prorated portion of your return which is filed next April. So, if you file at the end of August, the trustee can take 8 months of your return, unless it is exempted.

[bnkrptinva]

I am going to adjust my withholdings. My meeting is in 2 weeks. But even if I overpay, since I owe the IRS 3500 dollars, trustee will not be able to touch it (the IRS taxes owed are included in my filing). Still, I would rather get the money in my hand as soon as possible, and just stay on the payment plan. I'm so strapped for cash, living paycheck to paycheck..even w/out paying my stuff in the filing. I need more money.

[AfraidOfBK]

is there anything wrong with changing your withholdings a month or two before filing? If it makes it look less fishy - my husband is starting a new job, so with rearranging payroll and whatnot, perhaps adjusting withholdings is not that strange?!!?!

Also,
we usually get about 3500 back in taxes each year...thats with three kids and a bunch of mortage insterest. we stopped paying house pmts in march so that interest wont work in our favor this year. DOes anyone know if i should anticipate a large refund again since in 09 we will be adding one child?

Our taxes our so simple we have no other iras, 401ks or anything....jsut simple mortgage interest and child tax credit. I know each situation is unique, but i would like to exempt part of our tax return, im just not sure how much to exempt....will the attorney know this? How?

ANd what if I get next to nothing for a tax return (due to lack of mortgage interest writeoff? then i dont want to exempt $ for no reason...i could use that on something else.

[JoeBankrupt33]

we usually get about 3500 back in taxes each year...thats with three kids and a bunch of mortage insterest. we stopped paying house pmts in march so that interest wont work in our favor this year. DOes anyone know if i should anticipate a large refund again since in 09 we will be adding one child?

Well, let's assume that your itemized deductions (1040 line 40) were about 21,900 this year with the mortgage interest. Next year, if you don't itemize, then you will have about 10,000 more in taxable income because the standard deduction for a couple is 10,900 (based on 2008 numbers). Let's further assume that you are in the 15% tax bracket, which is quite likely. In this case, you will lose $1500 due to the loss of deductions (15% of 10k), but you will gain $1525 by adding a child due to the personal exemption and the child tax credit.

This also assumes that none of your other children will become inelegible for the child tax credit.

So, in my example, it's a wash.

[AfraidOfBK]

Well, let's assume that your itemized deductions (1040 line 40) were about 21,900 this year with the mortgage interest. Next year, if you don't itemize, then you will have about 10,000 more in taxable income because the standard deduction for a couple is 10,900 (based on 2008 numbers). Let's further assume that you are in the 15% tax bracket, which is quite likely. In this case, you will lose $1500 due to the loss of deductions (15% of 10k), but you will gain $1525 by adding a child due to the personal exemption and the child tax credit.

This also assumes that none of your other children will become inelegible for the child tax credit.

So, in my example, it's a wash.

Thanks so much for your response!
we paid about 18k in mortgage interest last year (2008) and all the kids should be eligible for child tax credit next yr too. Also, our ytd inome was jsut over 40k.....so is there a chance i could actually owe taxes? I guess i should check with tthe eax guy....

but in everyone's opinion- the trustee looks ahead at this stuff, right? So he would not anticipate a large refund and therefore close the case. Am i right?

[LuciluS]

Filing 9/30/09 and have no clue as to the amount of our 2009 Tax Refund because I only received 2 QDRO (from ex-husband) payments and will just have hubby's income which will be a lot less than 2008 because he was off ill practically the whole month of April and I receive SSD each month which was a $75.00 increase a month from 2008.

I did plug hubby's last year gross & my 2009 SSD into 2008 TurboTax & it showed a $1,000 refund before I even put in my QDRO amount which had 20%Federal withholding or Itemized Deductions. Had hubby check with his Payroll Dept. and he is claiming married and one exemption which is correct.

Guess it would be practical to wait as we will be using Federal exemptions, determine house value (bought 12/20/07) & then exempt what is in our checking account and apply the rest of the exemption to 2009 Tax Returns huh?

Do I need to spend the total of our 2008 Federal & State Tax Returns which was over $5,000, or can I exempt what is left in our checking account. I guess with hubby not being paid in April, I could use our house payment of $924.01 & car payment of $437 being paid from our 2008 taxes?

Luci

[anuta]

Hmm--I run my own business--so I don't know how I would up my exemptions. How much can one exempt in BK as far as future returns are concerned?

[Bankruptcy20]

Were any of you who had your trustee try to take your 2010 tax return originally a "no asset" Chapter 7 case?

If you were a no-asset, and this issue of future tax return comes up, did it bog down your process a lot? Or, is it simply just a loss of future income? And the process/timeline is the same?

[SCorpPain]

Hello all. I'm new around here, this is my first post, though I have been reading off and on for about a week.

I had my first meeting with an attorney last week. I am the 100% owner of an S-Corp that has been taking the same dive that many small retail companies have been on for the last 18 months or so.

The attorney advised that I should stop attempting to pay unsecured debt and close the business over the next few weeks. Then file personal bankruptcy since I signed for the debt -- it's ALL business related, my personal finances are in ok shape, but I will still have to file because they will come after me when the company shuts down. There is no question about a Chapter 7 or 13, it will be a 7.

Now, to the latest issue I am trying to work through. Since the company is an S-Corp (as most of you know) the loss passes through on my personal return, thus I will get a sizable tax refund. I am getting W-2 wages from the company and will be out of work when I shut it down.

Initially I had planned to use the tax refund to help bridge the gap until I was able to find other employment. My attorney said that they would take the refund. ouch!

Yet, I have read here, in several threads, that the tax refund can be exempted. How is that done? I live in Colorado, so from what I understand I do not have a choice to use federal bk guidelines.

Thanks for any insight.

[DebtEnder]

Most often it is done via the Wildcard option that many states offer. Often augmented by the fact most wildcards can be larger if you DON'T use your, or at least have some leftover, homestead exemption.

However your state does not have the wildcard option.

The only part of a return that could be exempted is

(o) The full amount of any federal or state income tax refund attributed to an earned income tax credit or a child tax credit;

So only those credits could be exempted. If you are planning to file now and your talking about your return for 2009 then hopefully you would only have to give him jan to may refund so 7/12 of the refund would be yours.

If your talking about a refund you are getting back for 08 taxs then you should wait to file till you can spend down the refund on living expenses. Get things fixed that need fixing, including yourself

[SCorpPain]

teply to DebtEnder...

If your talking about a refund you are getting back for 08 taxs then you should wait to file till you can spend down the refund on living expenses. Get things fixed that need fixing, including yourself

hmmm interesting. It is the 2008 refund I am thinking about. As a retail business we are never able to close the books in time for a 3/15 filing, so we file an extension, that then results in me filing an extension to my personal return. I have the business return now, though not mailed yet, so I can file the personal return.

There are ample things that need to be fixed. Spending it on necessatities would not be a problem.

Thanks for the reply.