Claiming less tax deductions to facilitate a Ch7

[signal]

I usually pay say $30k into taxes a year, and get back a $8-15k return. It depends on how many deductions my accountant can find for me. Things like mileage and other write offs.

I am looking at my means test, and I am way to close. If I don't get a large tax return however, I would pass the return for sure I would feel. So can't I just be more loosy goosy with my tax return and just let the Govt have more money than I probably need them too? I mean, say I don't declare certain deductions, donations, mileage and expenses...........

Or what if I took out a term life policy? I mean, if people are within $100-$150 a month of making a ch7, can't they just assume additional expenses and then file ch7 in say 3-4 months?

[iv65536]

Depending on exemptions, I suspect the trustee will almost certainly want the refund.

[HHM]

Your tax return has nothing to do with it. The means test is simply your last 6 months of income. Probably a little late in the game, changing exemptions rarely has enough of an impact to alter the means test.

[iv65536]

Your tax return has nothing to do with it. The means test is simply your last 6 months of income. Probably a little late in the game, changing exemptions rarely has enough of an impact to alter the means test.

Good point. The fact that he has enough income to allow for $30k a year in withholding in the first place suggests that (assuming primarily consumer debts) the means test is going to be a huge obstacle. Even if he is able to file Chapter 7, this is one where I see it as almost certainly an asset case.

[signal]

But what about your available disposable income? Which is calculated by subtracting among so many other things, income taxes that you would owe. I pay $30k and typically get back 9-15k. What if I paid $30 (which I have been doing) but I don't look at as many deductions, in other words, I make sure I have no refund coming this year, that would mean less disposable income.

I am already above the median income, so for me, I am looking at what deductions I can take (taxes, insurance, secured debt, etc) so that I have as little money left to make the ch7 work.

I pay 2500/mo in taxes. I put down on my worksheet I pay 1500/mo (since I typically get a refund of around 10-15k). I failed the means test. I then say, well what if I say I pay $2000/mo........then I pass. So the only reason the govt gives me back money, is because I submit lots of documentation to get that money back........but what if I left it to them, no schedules, just let them have the full amount, then it puts me in the green for the test from what I have seen.

[readytofile]

I hate to say this but I don't know if I'd count on a Ch7. Doesn't sound to me from this thread and the other one like you're even close. You really need to talk to a lawyer.

[iv65536]

I doubt very much you will be able to file Chapter 7 without your means test being closely examined.

That being the case, you really don't want to try doing this pro se.

[signal]

I have no intention of doing this pro se. I do plan to retain a lawyer this week. What I have done, is filled in the means test online, and left out alot of stuff. Just my quick and dirty filling out things to the exact penny like income, autos, home mortage, and secured debts, and taking my standard deductions, puts me with only a few hundred dollars a month disposable income. I was just doing this for my own intrigue. I am sure once I obtain the right lawyer, they will find alot more expenses I dont even count. For example, until tonight I wasn't even counting my auto insurances, my home insurances, my home owners association fees, etc.

I have been stressed very badly these last few days, as I realize I am in serious trouble. Being able to see a means test that lands me a few hundred dollars away from considering ch7 makes me feel good, as there may be some planning that can close the gap on a few hundred dollars a month.

[HHM]

Here is the other problem...you mention secured debt, from your other thread, it sounds like you are walking from some of it; depending on your state, you may or may not be able to take that on part 2 of the means test, but the US Trustee is going to limit you on Schedule I & J.

I hope you are able to get a chapter 7, but based on what you have shared so far, it doesn't seem realistic.

[StartingOver08]

.... realize I am in serious trouble. Being able to see a means test that lands me a few hundred dollars away from considering ch7 makes me feel good, as there may be some planning that can close the gap on a few hundred dollars a month.

This is the key. That and make sure you have all of your documentation. I can't stress enough that you have all the 'backup' the trustee asks for in the BK. Have it ready before you file. You will need it anyway to fill out the schedules accurately and to provide to your attorney. The UST was at my 341 by phone - and I was continued and had to attend a second 341. But after they reviewed all the documentation, I was successfully discharged in a Ch 7. They will look at everything - and because you are over median and have a business you will have to provide more information than your typical BK (I ended up providing about 2000 pgs some info going back years as required). For you, the prep time is critical.

BTW, my attorney knew immediately when I interviewed him that the UST was going to be interested and he knew exactly what needed to be done to have a successful Ch 7.

[albacore44]

last time I checked there was no place to enter payroll taxes on the means test so taxes would have no bearing on it. i used the online Means Test and it goes by gross income. Did i miss something ??

[tdawg]

But what about your available disposable income? Which is calculated by subtracting among so many other things, income taxes that you would owe. I pay $30k and typically get back 9-15k. What if I paid $30 (which I have been doing) but I don't look at as many deductions, in other words, I make sure I have no refund coming this year, that would mean less disposable income.

I am already above the median income, so for me, I am looking at what deductions I can take (taxes, insurance, secured debt, etc) so that I have as little money left to make the ch7 work.

I pay 2500/mo in taxes. I put down on my worksheet I pay 1500/mo (since I typically get a refund of around 10-15k). I failed the means test. I then say, well what if I say I pay $2000/mo........then I pass. So the only reason the govt gives me back money, is because I submit lots of documentation to get that money back........but what if I left it to them, no schedules, just let them have the full amount, then it puts me in the green for the test from what I have seen.

From the way I understand it, for the means test, you should put down what has been being held out of your check, which would be 2500/mo. Just go straight off of your paycheck statements for that. 1000/mo can obviously make a huge difference in the means test. The trustee may very well take your tax refund (if you can't exempt it).

Now, the schedule I and J are different than the means test though.

[justbroke]

last time I checked there was no place to enter payroll taxes on the means test so taxes would have no bearing on it. i used the online Means Test and it goes by gross income. Did i miss something ??

Um, yes there is, if you use the actual form (B22A/Means Test). Overpayment (overwitholding) is specifically what Trustees look for when examining your prior year(s) tax returns. They then compare this to your current monthly income to determine if you are overwitholding. This is why some Districts require that the average "refund" is included as income on your Schedule I (and form B22A), as an average monthly figure.

I know that in my District, while it is not required to include the average refund as income... they do have a special spreadsheet version of the Means Test (Form B22A) to do the over/under calculation themselves!