Bonus and withholding...MEANS TEST

[mdk2006]

We are in the process of filing for Chapter 7 in Illinois. In July my husband received a bonus. $3000.00 was withheld for taxes.

Our lawyer has been working on our Means test.....when reporting all earning for last 6 months and the general tax withholding for each month we FAIL the Means test. I realized he is not figuring in that $3000.00, which is showing we have over $2000 additional in income....causing us to fail Means test.

I KNOW there is a way to figure in the withholding, I found a thread somewhere that showed how to do it, but want to check here.....figuring in the withholding of $3000 we EASILY pass the Means test.

Anyone know how to do this and where to find any information on it, so I can forward it to my lawyer!

Thanks!

[newbie2]

Sounds like your lawyer just missed it. Give him/her a call today and let them know about the oversight. They'll get it straightened out.

[mdk2006]

Thanks newbie....I think he is "mad" that I called him out on this, I have been arguing with him for a week about this means test and I sat down and tried to figure out how he gets us to fail and I get us to pass....then realized the $3000 not reported.....ARGH!!!

As if it is not STRESSful enough to be doing this in the first place!!!! I did point it out and am waiting to hear from him, but they are soooo busy and I think he is a bit miffed that me with just a BA figured this out!!!!

Thanks!

IS there a special way to figure it?

[leena]

Worst case,you hang on for enough months to take the bonus out of the six month lookback. You would not be the first to delay filing for that reason.

[OhioFiler]

The Means Test is an average of the prior 6 months. The $3,000 tax on his bonus would be reflected as $500 on the Means Test.

If you file in November the income and taxes used on the Means Test include ALL income received and ALL taxes* paid during the months May-October 2009.

There isn't any special way to figure it.

*excluding sales and property taxes.

[ForumReader]

Thanks newbie....I think he is "mad" that I called him out on this, I have been arguing with him for a week about this means test and I sat down and tried to figure out how he gets us to fail and I get us to pass....then realized the $3000 not reported.....ARGH!!!

As if it is not STRESSful enough to be doing this in the first place!!!! I did point it out and am waiting to hear from him, but they are soooo busy and I think he is a bit miffed that me with just a BA figured this out!!!!

Thanks!

IS there a special way to figure it?

Sorry about the lawyer giving you a hard time about the withholding figure and the means test. Have you retained him fully to do the filing for you? It sounds like maybe it is too late to look for another lawyer Good luck with your BK process.

[jribe]

you can included taxes withheld from paychecks on the means test.. did he do that?

[tdawg]

Sorry about the lawyer giving you a hard time about the withholding figure and the means test. Have you retained him fully to do the filing for you? It sounds like maybe it is too late to look for another lawyer Good luck with your BK process.

I'd concur with this. If you haven't retained him yet, I'd retain a different lawyer. Working with a lawyer who is more concerned about admitting they were wrong than your best interest doesn't sound great. Good luck in whatever you decide! :-)

[momisery]

I do have to say the we talked to 3 lawyers before we found one that agreed with a 7. Considering we were under the median I really did not get it. They all seemed to waffle on if you received rental income, can you list the payment as a debt against the income, or just the repairs? The one we did pick finally was not considering my husbands income had expenses. He works for TOTAL commission, but draws unemployment most weeks. Only job he could find and I can hardly tell him to not work without crushing his spirit. Anyhow, that job is sales and they do not pay him for his travel, hotel rooms, or food out of town. He also HAD to have a cell phone with texting, a GPS and a laptop to keep the darn job. I hate todays companies with their demands on you spending your money for their huge profits so you can maybe afford to eat. Anyhow, we are concerned about running out of unemployment, so our last great hope was that this job given enough energy would produce enough, but who knows? Anyhow, the lawyer did not even point out the deducations for self employed or the cost of the healthcare we have to pay for. I found those things, and I am a total idiot in law, but I do know taxes a bit. I have been steered towards a 13 so many times and the reason I have been told is that there is much more money for lawyers in the 13. Once would think the whole country has lost its morals and lost its ability to service its customers with the best service anymore with all the crazy stuff going on anymore. Lawyers fill the yellow pages, sorting though is impossible, all you can do is try. Maybe Angies List is on to something there! A place to find HONEST people on a list of some sort for all types of business would be a wonderful asset!

[OhioFiler]

I'd concur with this. If you haven't retained him yet, I'd retain a different lawyer. Working with a lawyer who is more concerned about admitting they were wrong than your best interest doesn't sound great. Good luck in whatever you decide! :-)

We can't be certain the attorney is wrong. I read the OP's questions to mean they think the taxes paid should be deducted on the means test as a lump sum when only 1/6 of the tax is the correct portion for the monthly means test.

[tdawg]

We can't be certain the attorney is wrong. I read the OP's questions to mean they think the taxes paid should be deducted on the means test as a lump sum when only 1/6 of the tax is the correct portion for the monthly means test.

Good point, OhioFiler. From what I read in the post, it looks like the attorney deducted nothing from the means test. And I'm assuming (that word can get me into trouble) that the OP is deducting the tax from the 6 month total before dividing by 6, so they are in effect deducting 1/6 of the total from the monthly value.

[mdk2006]

Wouldn't it just make more sense to do 27% of gross income for 6 months? Couldn't you do it both ways?

[mdk2006]

And, just to clarify, do you take the 1/6 and figure it into the AVERAGE or do you take the payroll average and ADD the 1/6 to it?