Taxes and Witholdings

[LJoutWest]

I have a question. In reviewing our tax information in past years we had the interest deduction for our home. This year we did not make a payment and that deduction will not be available on our Federal and State Income Taxes. As a result we must change our with holdings in order to offset that loss and not have a huge tax burden that we would owe. The result is we are going to see around a $400 increase in our witholdings which will decrease our future revenue and/or our ability to fund a chapter 13 if the UST tries to move us from a 7 to a 13 (presumed abuse has been file so they could review our amended filings).

So my question is should that be reflected in the filing (I've emailed our lawyer and not heard from him) and will the UST take that into consideration when reviewing our filing? Is it a valid argument since we can show that on our tax returns that are coming up?

[LJoutWest]

Heard from our attorney, yes, that should be on the schedule J but in our case only for 9/12 of the increase since we are looking at a year from October 2nd, and thus Oct., Nov., and Dec., won't show a change but Jan. through Oct of next year will and thus we have to compute what our increase witholding will be and then take 9/12 of that and list it on the schedule J since it is an increase expense moving into next year (forward, it does NOT go into the means test). I'm paraphasing but the point is IF your losing your home in the Chapter 7, make sure yo compute the increase in tax witholdings you'll need to cover the loss of deductions from the interest of the home.