If BK filing time starts closing in on tax refund time?

[shoopy]

We are not expecting a huge tax refund, but if it starts looking like there will be a couple of thousand or so in refunds due, is it considered bad form, or illegal to move sufficient funds from a traditional IRA to a Roth IRA, to cause a tax liability to eat up some of the potential tax refund and make it unavailable to the trustee?

[btbeme]

If that is something that you typically do each year I doubt that it would get a second glance. If this is the first time you do it, it might get a scowl from the Trustee, or it might trigger a more in-depth look at your filing as a whole. A deposit of size might get scrutiny, but I don't know what a transfer would look like, as it would be from an exempt to another exempt account. But, since all it does is create a tax liability and therefore take money from your pocket, isn't the result the same as if the Trustee wanted it?

Not that you would necessarily "lose", but bad form is about right. Bad form smells fully. Bad form on a good day might get by; bad form on a bad day might get hammered.

If the refunds are largely due to withholding, you can bet the Trustee will take an interest. But if the refund is almost all child-tax credit, etc then it is hard to say that the refund is from excess income withheld and therefore an asset.

Where are you in your exemptions? It is usually possible to exempt a future tax refund if the timing is right.

[keepmine]

You need to revisist some things with your lawyer. Mi. allows you to use Federal exemptions and there is $10K wildcard that could be used to exempt a tax refund.
I agree with Justbroke in your other thread. Have your lawyer exempt your bank account and the refund. No need to play shell games when you nhave a straight forward exemption available to you.

[AngelinaCatHub]

You need to revisist some things with your lawyer. Mi. allows you to use Federal exemptions and there is $10K wildcard that could be used to exempt a tax refund.
I agree with Justbroke in your other thread. Have your lawyer exempt your bank account and the refund. No need to play shell games when you nhave a straight forward exemption available to you.

YES! I just told another OP not to move stuff around as the appearance of wrong doing can hurt as the actual wrong doing. It is difficult to undue a mistake once it appears like you wish to "work the system". 'Hub

[shoopy]

You need to revisist some things with your lawyer. Mi. allows you to use Federal exemptions and there is $10K wildcard that could be used to exempt a tax refund.
I agree with Justbroke in your other thread. Have your lawyer exempt your bank account and the refund. No need to play shell games when you nhave a straight forward exemption available to you.

Due to not wanting to use Federal exemptions, to avoid having the trustee second guess the equity in the homestead, I will be using Michigan exemptions, which currently do not allow anything in the way of exemptions other $1,000 for household stuff. So, having cash on hand as low as possible is definately a concern.