Does your tax refund count on your 6mo lookback in az?

[waldo05]

Hello everyone,

I had a question. We are going to receive a substantial refund (due to an adoption) and should finally reveive it by mid July and was wondering if this would be counted as income on our 6 month look back if we plan to file this fall?

Thanks in advance....

[sunshinepa]

Mine was counted as income, I believe all refunds are. It can be exempted if you have enough. My attorney added mine into my income by dividing the 1049.99 by the six months.

[LadyInTheRed]

It can be exempted if you have enough.

This statement confuses two issues. The issue raised by OP is whether it is considered income in the 6 month look back. I agree that it is.

The other issue (also an important one) is whether there are exemptions to cover any portion of the refund that is not spent before the filing date. If the cash is spent before filing, exemptions are irrelevant, unless it is spent on non-exempt assets. If part of the refund is unspent on the day of filing remaining, it will be cash listed as an asset on the petition with any available exemptions applied.

[Over our heads]

Being an adoptive parent myself, I understand just how much an adoption credit return can add up to. Where we were in MO, our refund was not considered income, because you have already earned it, and your income is already accounted for. Just because your tax return/refund is more didn't matter.

What we were advised to do was get our refund, spend it wisely, and once it was gone, we filed. The trustee did ask us about our large refund, and we did simply explain that it was adoption related and that we do not get such a large amount every year.

But that was just us, in a different state! Ask your lawyer, and if need be, either let the refund go to the court, or wait to file.

[jetsfan2010]

interesting..

if the original poster had filed a day before he/she received the tax refund, would the refund be an issue or counted towards income at all in the case? To me, this falls in the same bucket as the person who gets a bonus from work, but files a week or so prior to receiving it?

[waldo05]

i would lose the entire amount to the trustee instead of spending it on items we are allowed to spend it on. Does anyone know if we are allowed to spend down our amount owed on our car as long as we don't exceed the 5000.00 we are allowed to claim? (for example if we own 5k and it is worth 7k can pay off 2k in order to have 4k equity?) or is that considered a pref. payment?