Trustee Stipulation--Taxes

[LynnD]

Just curious what is this saying:

All tax returns and refund checks shall be delivered to xyz. Upon receipt of any refund check, the Trustee will deposit the same in a trust account. The refund for the applicable year will be prorated as follows: the amount of the refund will be divided by the number of days in the year for which the taxes were overpaid; the quotient will then be multiplied by the number of days in that year following the date of the filing of the petition to determine the amount to be refunded to the Debtor(s). The amount of the tax refund which is not returned to the Debtor(s) will be retained for the benefit of the creditors of the estate. The total amount of non-exempt assets owing to the estate will be offset against any Federal and state tax refunds, in any, due the debtors.

So I filed Dec 14th. Is this saying they will divide the amount returned to me by 365 days and I get to keep 17 days worth (Dec 14th to 31st)??

[despritfreya]

You got it.

Des.

[HHM]

Yep, that is what that is saying. Sorry.

[angles]

Too bad it does not work in the other direction. I would really like the Trustee to pay my taxes.

[chicagoannie]

LynnD - did this notice about your tax refund come in the mail? Was it from your specific trustee? You have not had your 341 yet, correct?

[tcreegan]

Hi Lynn,

In Colo the EIC and child tax credit portions of your tax refund are exempt, you keep those.

Colo. Rev. Stat. § 13-54-102 (1)(o)

Also saw an interesting case where the debtor applied their refund to next years taxes. Trustee couldn't get ahold of it, court said it was OK

Graves No. 08-1462 10th Cir

...oh well, just wishing you can keep more than 17/365ths of it...

Tom in Colo

[pavlikclan]

Ok dumb question here does that mean if I file now they will take the entire refund? I am waiting till after my return is filed and the refund comes back so this is just a curiosity thing more than anything.

[free2breathe]

The taking of the tax refund is discussed quite often on this site. You'll find that stories vary from state to state, trustee to trustee it seems like. Some states allow you to exempt your tax refund, some - as Tom states - don't lay claim to your EIC or Child Tax Credit (unfortunately, our state does take them... ugh), and a lot of the issue is definitely based on the date you file. If you file later in the year, the panel trustee often lays claim to the the percentage of your taxes that were "earned" up to the petition filing date as an asset of the estate. If you file bankruptcy early in the year, before filing your taxes, the trustees eyes bug out and they think $$$ coming with the refund. If you wait to file till after you've received your refund and spent it down, it seems to work out the best for keeping the money in your own coffers. Unfortunately, there is seemingly no standard that everyone can rely on.