6 Month's Income Prior to Filing

[gak555]

This regulation really seems to be open to good or bad timing. For example, I have a plumber friend who's income is above the median for Virginia. He told me he took a leave of absense without pay during the 6 months just so he could get under the 6 month average........said he flew through without any problem. I was contemplating doing the same thing, but for some reason it seems unethical.

I guess this whole thing could work the other way too. For example, if someone makes under the median for their state, but then gets a large tax refund during the 6 months before filing it might push them over the median.

Does anyone else think this income measure is wacky ?

[keepmine]

BK is a business decision. Don't get caught up in some antiquated ethical debate. If it's legal, it's not unethical.
I know someone who is going to take advantage of the family leave act. Two months with no income and she passes the means test. Ya do what ya gotta do.

[Jenny]

Filing bankruptcy is a business decision to some degree. But like all business decisions, some are good and some are bad, and there are good and bad ways to go about them. A lot of people have bashed rich folk like Donald Trump here for filing bankruptcy. Well, he made a business decision. If it's really that simple, then he shouldn't be slammed any more than anyone else. Laws can be bent while not breaking, but at the end of the day, you have to be able to look yourself in the mirror and be proud of yourself knowing you did the right thing. Morality has a place in everything in life. Even in business. Do you the best you can. Make the best decisions you can. That's all anyone can ask.

[inseriousdebt]

This regulation really seems to be open to good or bad timing. For example, I have a plumber friend who's income is above the median for Virginia. He told me he took a leave of absense without pay during the 6 months just so he could get under the 6 month average........said he flew through without any problem. I was contemplating doing the same thing, but for some reason it seems unethical.

I guess this whole thing could work the other way too. For example, if someone makes under the median for their state, but then gets a large tax refund during the 6 months before filing it might push them over the median.

Does anyone else think this income measure is wacky ?

I had heard that tax refunds are not added in your 6 month income accrual---(maybe just your state refund?) Has anyone else heard of this as well and what is correct and what is not?

[keepmine]

I had heard that tax refunds are not added in your 6 month income accrual---(maybe just your state refund?) Has anyone else heard of this as well and what is correct and what is not?


I've heard that as well and form 22A does not specifically mention refunds.

[Jenny]

Logically it should be included in the income for the year the taxes were filed since it was an over payment of taxes. It should be spread out over the 12 months of that tax year. Of course that's logic, and the government doesn't always function based on that.

[inseriousdebt]

.....

I had heard that tax refunds are not added in your 6 month income accrual---(maybe just your state refund?) Has anyone else heard of this as well and what is correct and what is not?


I've heard that as well and form 22A does not specifically mention refunds.

I noticed this as well. I read in another thread too that an income tax refund is money owed to you that was basically kept by the government, so in all reality you already paid it....it was just OVER paid....errr....confused...!!

I am not for certain though on this issue....anyone else have any clarifying words of wisdom whom has filed recently?

What would happen for someone possibly considering filing later down the road if you use it from now till then to pay bills?

[brokentex]

I noticed this as well. I read in another thread too that an income tax refund is money owed to you that was basically kept by the government, so in all reality you already paid it....it was just OVER paid....errr....confused...!!

I am not for certain though on this issue....anyone else have any clarifying words of wisdom whom has filed recently?

What would happen for someone possibly considering filing later down the road in let's say summer if you have already cashed your refund and are using it to pay on items??

Your refund is not extra money. When you file, the amount used for the means test is Gross monthly pay if you work at a job that witholds taxes.

[Jenny]

I suppose a tax refund could be considered money owed to you by the government because you actually gave the government more money than you owed them in taxes. That's why it's called a refund. You over paid. If you hadn't over paid, that money would have come to you in your paychecks throughout the year in the form of income. That's why I would think it would be considered income for the year in which you over paid.

[gak555]

Getting back to the initial part of this thread. If a person loses one month's pay within the prior 6 months of filing regardless of the reason, then that is counted as part of the average. For example, let's say that John's income over the last 6 months looks like this.
Jan $4,000
Feb $4,000
Mar $4,000
Apr $ 4,000
May$ 0 (i.e. leave without pay)
June $ 4,000

Total income for 6 months $20,000
Average income for 6 months $3,333
Is that how it would work ?

[keepmine]

That's how I interpet it. Form 22A doesn't ask how-just how much.

[Minnymouth]

gak555,
I believe your calculations are correct. Its based on a 6 months average whether your worked all six months or not...

If your income tax is already spent, or you used it to pay your attorney before you filed, the trustee will not go after this years refund. He could possibly go after next years refund depending on how long your BK last.