Accounting for tax refund? How long?

[NewPage]

We received our state and federal refunds in February, and spent the bulk of them on braces and some of my (non-filing) husband's business expenses. The rest of it has been (almost) used (up) on gas, groceries, things of that nature. I have receipts for the big expenditures but not for every little thing; is that bad?

I'm waiting 90+ days from the major braces expense to file, I guess so it's not seen as preferential.

What is the trustee likely to ask at the 341? "What did you do with your refund?" As long as 90 days have passed, I guess there's really nothing he can do about a large payment, right? Can I get "in trouble"?

Also, since the EIC is exempt, do I have to account for that, or just for the amount over the EIC? I know no one can tell me exactly, just fishing for a general idea. Rounding numbers, the refunds were 7000-2000 EIC, so wondering if I would only have to (possibly) explain the 5k?

[newbie2]

If it was me I would account for every penny of the tax refund that was spent, not just the portion that wasn't the EIC. You're already stirring the pot a wee bit by pre-paying the orthodontist a large sum of money (5K is what I remember from your earlier posts). Now is the time to be pro-active when you file and document everything for the trustee. Others may differ in their opinions.

[NewPage]

Well, fortunately I can list in detail all transactions via the bank statements, which say things like Walmart or Union 76, that type of thing. We have been putting receipts in my "paper work box" but I don't know that we have them all. I'll go through this week and staple them all to some paper or something to organize.

[tobee43]

this is very interesting..we filed just before tax day deadline...

we were advised by our atty to spend every single dime...and make certain. we did, and at our 341 the subject never came up, although, as newbie points out, and although we were not advised to do so, i could account for every single dime of it...just in case we were asked.

i do think it depends on the time of year you file. hhm has a posts somewhere here on the forum with respect to oct being the time that trustee's really begin taking a close look at your possibilities and amounts of your returns. sorry...i tried to get you the link, but have been having some problems with the site for some reason the last week...however, if you can just look up hhm's postings and there is one excellent one on the subject matter you may find helpful.

[NewPage]

Thank you, tobee.

[tobee43]

most welcome! and good luck with it!

[AngelinaCatHub]

It is always better to be over prepared rather than under. I doubt that the child's medical issue will be questioned if anything at all comes up. As long as you did not pull credit in a chunk for all you spent, and you spent on exempt stuff anyway, you should be just fine. If asked, I would probably be right in the fact that if the child did not get worked on now, it would cause more expense and get worse for the child in the future so it's good you took care of this. The Trustees are not ALL ogres. 'Hub