Flexible Spending reimbursement question and cash on hand

[missdooly]

So, my husband had a lot withheld from his paycheck for dependent care and for healthcare costs. I submitted for both the dependent care and healthcare and am now getting checks back since I'm trying to squeeze it all in and use it up before Dec 31st. You get the picture. Well, when we file, is that cash on hand or considered extra income when the trustee sees the checks going into the bank? Is he gonna say, where's that money going? I mean it's like we are getting all this extra money coming in since we goofed around and waited on submitting these claims. But, it's our money that we already held back. Suggestions? I obviously cannot stash it.

[tcreegan]

Hi missdooly,

Well, when we file, is that cash on hand or considered extra income when the trustee sees the checks going into the bank? .....not extra income, but a cash asset to be seized by the trustee for the BK estate.

Is he gonna say, where's that money going? .....odds are pretty good they will, be ready for it, have documentation you spent it on legit expenses and not a trip to the Bahamas

But, it's our money that we already held back. ...welcome the wonderfull world of bankruptcy law..don't expect it to make sense all the time...any $$ received in the 6 months before filing is included in your income for the 6 month lookback for the means test.

Suggestions? ...use it up before you file, use it on healthcare and dependent care....

....and in NY you should be able to exempt 90% of it as unpaid wages withing 60 days of filing.

NY also has an exemption for $600 in a savings & loan acct (savings & loans is a type of bank)
This might be doubled for a joint filing, usually is

If you don't use your homestead exemption, NY allows an exemption for $2500 cash.
Again, might be doubled for a joint filing

And if all that can't help you, sell some milk, NY allows you to exempt 90% of earnings from milk sales to milk dealers

Tom in Colo

[backtoschool]

I would spend the money before you file. Otherwise it will need to be exempted as a cash exemption.

[missdooly]

Thanks Tom, Thanks BTS, WTH? You put the money aside thinking that in 2010 your wife will surely find a job and then you can't retract that money since it's part of open enrollment and your wife didn't get a job.We did just go ahead and put him in child care while I was temp working here and there and looking for work. I have that proof but didn't ask for reimbursement for flexible spending until,well...now. Damn! I understand "cash on hand". That's like savings. I should have thought before I actually wrote. But, now it's money left over. Dear God! I don't understand why those checks from my flexible spending would be apart of my income over the past 6 months since I've already paid into it.??? That could push me into a 13? If I'm over salary because of that??? Lunacy! Again, your support and advice is very appreciated!

[DebtEnder]

It would be savings, and therefore would need to be spent on valid stuff before filing. However it would not be income, it was already earned prior in the year. It is already part of your gross income from your paychecks. You can't be double counted on it.

[debee]

When you do the means test, you don't include the deductions to the FSA for health and childcare. You only get to claim the actual expenses for childcare. For health you reduce your income by a standard amount based on family size (whether you spent it or not), but if you actually spent more than that amount, you can claim the additional expense to the extent you can document it.

[tcreegan]

Hi again, missdooly,

Dear God! I don't understand why those checks from my flexible spending would be apart of my income over the past 6 months since I've already paid into it.???

Think about it this way, it is deferred income. You did not receive it when you earned it. Now you received it.

There is a lot of flexibilty in how different districts interpret the new BK rules, before you do/do not include this as income, check with a local BK attorney to see what is standard operating procedure for the trustees in your area.

Good luck with it,

Tom in Colo

[missdooly]

Thanks. My attorney is actually a trustee. Now that I think of it, I have all kinds of legit stuff to spend it on. Electrical repairs, heating maintenance, eye glasses, attorney and filing fees..... I think that he's tired of me asking questions and not yet filing and he's not very friendly which is why I turn to you all. But, we're waiting around on a proposed bill that is on the governor's desk to get passed to increase certain exemptions in NY. However, that may be pushed back til' January after today. Who knows! I'm tired of waiting. I want this over with. I just was baffled to see how different states are with exempt assets. NY is one big fat joke.

[tobee43]

that's good that your atty is also a trustee...i hope not yours...however, i'm certain the advise he/she is providing is valid and i would listen.

depending on what the money is spent on as the PP's have stated...if it's living expenses there is not much one can say...if it's a BOAT...well..then there may be a question or two.

[missdooly]

No, he can't be my trustee. Conflict of interest. As much of a jerk that he can be, I have to remember that he has HEARD IT ALL. You know..the jaded effect. Good news is that I will not be surprised at the 341 meeting. He make that promise to me. Good news-we've been paying for cash for everything for a solid year. Have not bought anything but necessities. Been budgeting the whole time. No activity on the cc's since last November. So, we're already living it just without the protection. Get to keep my home. Bad news-good ole' 35% interest sent us sailing high over the 100K mark in unsecured debt while trying to negotiate with these companies until the very end to no avail. So, all the flags will be raised and the flexible spending will not be spared, I'm sure.

[tobee43]

No, he can't be my trustee. Conflict of interest. As much of a jerk that he can be, I have to remember that he has HEARD IT ALL. You know..the jaded effect. Good news is that I will not be surprised at the 341 meeting. He make that promise to me. Good news-we've been paying for cash for everything for a solid year. Have not bought anything but necessities. Been budgeting the whole time. No activity on the cc's since last November. So, we're already living it just without the protection. Get to keep my home. Bad news-good ole' 35% interest sent us sailing high over the 100K mark in unsecured debt while trying to negotiate with these companies until the very end to no avail. So, all the flags will be raised and the flexible spending will not be spared, I'm sure.

no, i didn't think for one moment he was YOUR trustee...LOL!!! nope...that would most surly be a conflict...what i meant to say...is he knows the ins and outs of the system well...that certain can come in handy!

[missdooly]

For anyone that is interested, my attorney stated that income (flexible spending) was already accounted for and is NOT income for the purposes of the means test. I think that was most of your answers. I'll have to look again and thank you again, BTW.
I had told him that I look at various sites on the Internet to educate myself on this complicating world of BK and thanks for clarifying. He answered by stating that he "knows what he's doing and doesn't have time to defend his advice against anonymous people on the Internet". Isn't that so sweet. Why can't he just clarify the answer without being a total arrogant A** and adding that little verbiage! Furthermore, if I doubted his competency, I wouldn't have chosen him for counsel and..............NO ONE asked him to defend himself against bk forums.!!!!That's why we always tell each other to check with your attorney. It's a support group, you fool! God!!!! That made me so mad! Ok, I feel better now. I had to vent this somewhere and I know that I cannot say that to him. Otherwise, he'd drop me. I'm too far along with paperwork to start over.

[iv65536]

also FSA money is not part of your adjusted gross income for federal taxes.