2009 Tax Return - getting 1000s more than paid into taxes

[CCsAreEvil]

Ok, the trustee in our case said we needed to mail him our 2009 tax returns as well as the actual refund checks to his office once received.

Mind you, for 2008 and 2007, each year, we made over $50k gross earnings. Because of no employment for most of 2009, we made way less. I punched in our numbers into TurboTax's online estimator. It claims we will be getting over $8k back? I was expecting something around "at most" $1k. Something's not right.

Here's the TurboTax Online Estimator and click on "Estimate your 2009 refund" under Tax Calculators (must have Adobe Flash installed/enabled).

I tried a "second opinion" estimator (TaxBrain) and it was about the same.

So, here are our rough numbers for 2009:

Married Joint (ages: 40/43)
my income: $8k
my fed withholdings: 600
my state withholdings: 100
my unemployment income: $12k

spouse income: $13k
spouse fed withholdings: 1,000
spouse state withholdings: 100

Family (3 children under 17)

And boom.. $8.8k refund. We only paid $1.6k of fed taxes into the system. It just does not seem right. I did not even do any deductions (real estate tax/interest/etc).

Analyzing a little more, it appears the huge spike relates to Earned Income and Child Tax Credits. Very weird.

So, I guess I'll be giving up 2/3s to the trustee. I doubt he can (legally?) take more than that.

[JRScott]

And folks wonder why our country is going to bankruptcy....

Depends on your area though, I think the EIC is exempt in most states however you should ask your lawyer. It is also possible that you'll not see the check as it could be sent to the trustee directly.

[Naomi]

Not sure about what the trustee can take, but here's the info on the EITC for 2009:

New for tax year 2009: The amount of EITC increased for workers with a third qualifying child* and the rules changed for determining who is a qualifying child.

Earned Income and adjusted gross income (AGI) must each be less than:

$43,279 ($48,279 married filing jointly) with three or more qualifying children
$40,295 ($45,295 married filing jointly) with two qualifying children
$35,463 ($40,463 married filing jointly) with one qualifying child
$13,440 ($18,440 married filing jointly) with no qualifying children

Tax Year 2009 maximum credit:
$5,657 with three or more qualifying children
$5,028 with two qualifying children
$3,043 with one qualifying child
$457 with no qualifying children

[AngelinaCatHub]

And folks wonder why our country is going to bankruptcy....

Depends on your area though, I think the EIC is exempt in most states however you should ask your lawyer. It is also possible that you'll not see the check as it could be sent to the trustee directly.

Yes that will happen. The IRS has been notified if the Op has filed in the "suggestion of bk". We never even got our "stimulus check". We owe back taxes and it was applied directly. Very stimulating when we found out.

P.S. Rush Limbaugh appears to have had a heart attack yesterday afternoon in Hawaii. Is serious but no further word.

'Hub

[liboton21]

Filed on Monday this week and lawyer exempted my 2009 tax refund hopefully Trustee would not take them.

Wow! Rush was had a heat attack, he must be playing golf with Hussein Hope he is okay but I like Dr Savage than Rush and Sean.

[AngelinaCatHub]

Filed on Monday this week and lawyer exempted my 2009 tax refund hopefully Trustee would not take them.

Wow! Rush was had a heat attack, he must be playing golf with Hussein Hope he is okay but I like Dr Savage than Rush and Sean.

I listened to his very first show and remember it well. I hope Rush will be fine. I like Sean and Dr. Savage. 'Hub

[CCsAreEvil]

Yes that will happen. The IRS has been notified if the Op has filed in the "suggestion of bk". We never even got our "stimulus check". We owe back taxes and it was applied directly. Very stimulating when we found out.

I don't know what you are referring to when you say "suggestion of bk". Is that something I check mark on my IRS tax forms?

Also, I don't know how you guys were able to (pre-?) "exempt" your 2009 tax refunds. Does that vary by state? I'm in Arizona. I don't recall my lawyer doing that for us. I hope he didn't screw us on that one.

I just hope our workplaces get on the ball and give us our W2s sooner rather than later. Usually, they take until the last week of January.

[LimpDisc]

And boom.. $8.8k refund. We only paid $1.6k of fed taxes into the system.

[CCsAreEvil]

Not trying to single you out, but it baffles me that this is even possible. Nobody should ever receive more money back than they paid in throughout the year.

Trust me, I'm not gloating. I was rather shocked and thought the estimator was way off. I usually make (made.. probably wont make what I did again for awhile given today's climate) much more in the past. I had no idea how much this EIC affected people making much less. I always thought you could never get back more than paid into fed taxes. The system is bizarre. Either way, the trustee will get his fingers on most of it anyways. Go figure.

[drowningNdebt]

I'm in the same boat. My income was about $8,000 for the year since I only worked a few months. I'm unemployed to, no unemployment income either. I paid in about $700 in taxes. My refund I will be getting back is $1815. Heck I'm not complaining!!! It's about time the government helped me out. Those thieves are what got this economy in turmoil anyways.

[rrj]

I just put my info in the site. I did last year too and it was pretty much the same when i got them done

i guess the trustee will be getting about 2000.00 from me. it say my refund is 5500.00

they exempted up to 3500.00

[t45032]

so its like this trustee wont take my tax refund from irs directly when i recived i have to give them is it like this or not my lawyer said is it will be like that trustee did not take direct from irs because i don,t own any back tax.just like to no truth.

[t45032]

Can i call irs to find out about my tax refund comeing to me or trustee i am on bk 13 don,t own no back taxes.

[CCsAreEvil]

I hope this post/thread helps someone in the future.

Update on my case. Phoenix, AZ district. BK case was No Asset since filing in 09/2009. Turned into Asset case once TT found out I was receiving a large refund (AZ state+fed). As instructed, I had mailed TT my fed and state returns. AZ sent me the check directly in the US mail. I then mailed the AZ refund check to the TT (he requested it). The federal refund went straight to the TT from the IRS. I never saw it.

As TT claimed, the amount given to me was by taking the date of filing (day # of the year) and dividing by 365 (days in a year...duh). That percentage (of the combined refunds) goes to the BK case to be distributed to creditors and TT's "commission" fee. Remainder goes to me. It only took him about a week to mail me my "portion" of the tax refund.

Now, creditors have about 3 months to file claims to portions of the available assets (tax refund). I had about a dozen creditors, so yeah, that moneys long gone.

So, for those of you who plan to file in the future, change your exemptions now so you pay the least possible on your paychecks to taxes. This is probably the biggest mistake I did during my BK process. I had my unemployment payments take out taxes. If you plan to file for unemployment, make sure you tell them NOT to take out taxes.

[NewLifeHere]

Hi, CCs,

Thanks for sharing your story. I'm trying to figure out what to do in my case, where after discharge I found that I'm going to get a substantial refund when I finally file my 2009 return (see http://www.bkforum.com/showthread.php?t=57615 for discussion). The trustee never asked about a refund or anything about my 2009 return in my 341 and I wrote zero when originally filing. I'm wondering if my refund will just go directly to the trustee when it comes through. Comments, anyone?