How much of my tax refund will I be able to keep?

[luckstyl]

Is it possible to file an amended schedule C to add the tax refund, just in case it wasn't listed already?

[daylate]

[QUOTE=btbeme;556024]Income tax refunds are really nothing more (in most cases) than deferred income.

Not to split hairs but it really isn't deferred income; it is actually an asset (receivable) that you have because you had too much withheld. It really is no different than equity in your car or house or your antique watch for example. If you can't exempt it, it is fair game for the trustee to take as btbeme explained. Just being a bit anal here today guess it is my accounting education kicking in.

[hp2002grad]

What about tax credits(such as the earned income tax credit, tuition credit and child tax credit) do those get taken away or do they just calculate what they will take from your anticipated refund based on what has been withheld from your paychecks??

FYI I filed in October

Thanks,
HP

[btbeme]

What about tax credits(such as the earned income tax credit, tuition credit and child tax credit) do those get taken away or do they just calculate what they will take from your anticipated refund based on what has been withheld from your paychecks??

FYI I filed in October

Thanks,
HP

In almost every case I have seen, the withholding is the target, followed by certain carryovers and credits (losses, overpayments, etc) that are residue of prior financial transactions or tax situations. I think it would be difficult for a Trustee to argue that a child tax credit could somehow be considered income...but I am not a Trustee. Or a BK judge.

[Drazil65]

We filed on 12/13/2011, just had the 341 on 1/17/2012, our entire refund was exempted. Trustee never brought it up and our attorney said we will keep all of it.

[hp2002grad]

In almost every case I have seen, the withholding is the target, followed by certain carryovers and credits (losses, overpayments, etc) that are residue of prior financial transactions or tax situations. I think it would be difficult for a Trustee to argue that a child tax credit could somehow be considered income...but I am not a Trustee. Or a BK judge.

Is there somewhere in a ARS i can look at to see if a tax credit is not considered income and therefore excempt?

[lotsahats]

Look on your Schedule C to see if your anticipated refund is exempted. If it is, you will be able to keep your refund unless the trustee objects to your exemptions for some reason. If it is not exempted and the trustee wants your refund, your case will be declared an asset case and you should get a notice telling you how much of your refund to turn over.

What would prompt objections from the trustee? Do they just sometimes pick random people to mess with? ("You know what? I know you have more than enough room for exemptions, but I don't care. I want your tax refund.")

I need my refund. My car needs work, and I'm also planning to use it to pay for my attorney. And I have more than enough room to exempt it.

Crap. Now, I'm worried. Again.

[df04527]

The roller coaster ride of BK. It will get better...hang in there.

[btbeme]

Is there somewhere in a ARS i can look at to see if a tax credit is not considered income and therefore excempt?

Unknown...but as my Grandfather once told me, "There isn't anyone in America more powerful than a BK Trustee...except for maybe a BK judge."

The thing is, unless there is clear and convincing local precedence, and your case pretty much exactly matches that precedence (including the Trustee) it is difficult, at best, to argue that you somehow "deserve" something that the Trustee, with lots of federal leverage, can determine as being outside the necessary exemptions. What they say, goes...until such time that someone disagrees and has an attorney ready and willing to run up (and die?) on that hill, and get the UST on their side, and..and...and...

Don't forget - you file the Ch 7, and in doing so you turn over everything that you own to the Trustee, who then releases what he feels is appropriate under the law back to you. That is the very essence of a Ch 7.

But at least we don't have debtor's prisons ("Can't pay? Then maybe your relatives can...") or Sharia Law ("Can't pay? We'll chop parts off of you until you can..."). A tax refund is a small price to pay for a clean, legal, non-lethal do-over.

[doni49]

I'm also planning to use it to pay for my attorney.

So you're saying you found an atty willing to do the filing and wait before getting paid? WOW!

[chiwawa]

My attorney will amended the schedule to exemption my income tax refund and the fee is $100.

[lotsahats]

So you're saying you found an atty willing to do the filing and wait before getting paid? WOW!

No, I'm saying that when I find an attorney, I'm going to use money from my tax refund to pay his/her fee.

[LadyInTheRed]

What would prompt objections from the trustee? Do they just sometimes pick random people to mess with? ("You know what? I know you have more than enough room for exemptions, but I don't care. I want your tax refund.")

I need my refund. My car needs work, and I'm also planning to use it to pay for my attorney. And I have more than enough room to exempt it.

Crap. Now, I'm worried. Again.

Please don't worry. I didn't want to say that prindia's refund is exempt just because it is on Schedule C since I don't know if prindia's refund is actually exempt. If you are entitled to the exemption and it is correctly listed on Schedule C, you'll get the exemption. The trustee will only object if he believes you were in error in listing it as exempt.

[doni49]

No, I'm saying that when I find an attorney, I'm going to use money from my tax refund to pay his/her fee.

Oh sorry. I misread that. I assumed from what you wrote that you had already filed and were concerned that the trustee was going to object toyour exemptions.

[doni49]

My attorney will amended the schedule to exemption my income tax refund and the fee is $100.

Well isn't that generous of him. IMHO that is something that the attorney should've covered in the planning/paperwork stages. I believe that if I had paid an atty the kind of money they charge for a BK7 and I found out my tax return was at risk because he didn't properly list it in the exemptions, I'd be expecting him to amend it for free and be thankful I wasn't pursuing a malpractice claim against him. Geesh!