tax refund

[LostNFound]

You mean, they would actually be interested in my tax return from LAST year?? Seriously?

We don't have the ability to SAVE anything because we dump all of our income into making the mortgage payments on our rental properties (tenants can't pay full amount or are out of a job). Getting them out is pointless.

In a perfect world, I would love to bank about 3 months worth of rental payments and keep my tax return. But I'm so nervous about getting into trouble, I'm afraid to allow myself to keep anything.

I am so torn between wanting to do what is right and literally walk away with NOTHING. Or, feeling bitter for the money that we've lost and trying to hold back some of that rental income in hopes of getting my feet back on the ground. The thing is, we are going from day to day on a wing and a prayer. If anything happens to those rentals, we can't afford to fix or repair it. Worse yet, if anything happened to my family, we have no savings...NOTHING, to fall back on. I am frantic because we've always had an emergency fund. Mind you, this doesn't count the credit card debt I have avoided paying since Feb and I STILL can't get ahead.

I need that tax return.

[OhioFiler]

You mean, they would actually be interested in my tax return from LAST year?? Seriously?

We don't have the ability to SAVE anything because we dump all of our income into making the mortgage payments on our rental properties (tenants can't pay full amount or are out of a job). Getting them out is pointless.

In a perfect world, I would love to bank about 3 months worth of rental payments and keep my tax return. But I'm so nervous about getting into trouble, I'm afraid to allow myself to keep anything.

I am so torn between wanting to do what is right and literally walk away with NOTHING. Or, feeling bitter for the money that we've lost and trying to hold back some of that rental income in hopes of getting my feet back on the ground. The thing is, we are going from day to day on a wing and a prayer. If anything happens to those rentals, we can't afford to fix or repair it. Worse yet, if anything happened to my family, we have no savings...NOTHING, to fall back on. I am frantic because we've always had an emergency fund. Mind you, this doesn't count the credit card debt I have avoided paying since Feb and I STILL can't get ahead.

I need that tax return.

Your best bet is probably to wait to file after you receive and spend most of your 2009 tax refund. You can spend much of it on a car if you need one. Just be sure you can exempt the equity in the car.

The best approach (though too late for this year) is to modify your withholding so you don't loan the federal government $500 each month then wait until the spring to get it back with no interest earned.

[LostNFound]

I'm self employed, so a lot of my income is written off.

By the way, when you file bankruptcy, how do they figure your income if your self employed? I hope they don't go with the gross amount. If that's the case, it would make filing a Chapter 7 much more difficult. ( I think ).

[nerves]

Good afternoon LNF. We just got back from the lawyer's office - we have officially signed and he will submit it yet today!!!! He is in his office this afternoon if you want to try and give him a call. I believe his office hours are until 4:30. I really think we found a gem for a lawyer.

I would have to agree with what Ohio stated - spend your 2008 tax return before filing. As long as you keep documentation of what the funds were used for you should be okay (assuming it was for neccesities such as living expenses, reasonable transportation, etc). Your 2009 will be the one of issue - you probably won't get much of that back. Since our business showed a loss (depreciation, etc), we didn't pay any taxes for business income. If your tax statements show a business loss for the prior years, I think your income would be the draws that you have taken from the business over the last six months. I don't think keeping three months of income will be an issue as long as it keeps you below the means test and within exemptions will be a problem. You can keep up to $1000 each (you and spouse) as your wildcard. Hope this helps.

[nerves]

A couple of other things I just thought of - I am not sure if your tax return will count as income for your six month look back - that may create an issue for the means test for you. As for the taxes being withheld - since our business showed a loss, we got all the taxes I paid in from my job back as a refund last year. If you are paying taxes and your business shows a loss - it will probably offset the taxes you may be paying in from other income sources.

[LostNFound]

Yes, our business has shown a $25K loss for 2007 and 2008 (both years). We couldn't take the entire loss the first year. I'm not sure what things look like this year as I have to work on that still. We make very little money on paper. By the time all my expenses are taken out (I do daycare), I hardly make anything. Our kids have been on state medical insurance for a few years (even though we still pay and have them on our insurance, the state picks up whatever insurance doesnt). It is something that just happens every year. We also qualify for free lunches at school for my kids.

All of this and we live in a new home (7 years old). We have very little equity in our home at this point in time. We also own a 2003 truck which will be paid off in September 2010--so I sort of feel the need to file before that gets paid off or it's another issue for assets for us.

[nerves]

I am not 100% sure but your income would be what you draw from the business for personal expenses. My husband hasn't taken any draws so he didn't have any income from the business for the past six months for the means test.

[Mi Bankruptcy]

This shouldn't be an issue. They already figured out what you earned and if you were over\under the median. The tax return is for overpaying the feds or state. Your income was still calculated prior to filing.

[OhioFiler]

I'm self employed, so a lot of my income is written off.

By the way, when you file bankruptcy, how do they figure your income if your self employed? I hope they don't go with the gross amount. If that's the case, it would make filing a Chapter 7 much more difficult. ( I think ).

They'll want to see profit and loss statements and bank account statements. Your income is not gross receipts. Hopefully, your statements reflect the true financial picture of your business.