Tax Refunds = Red Flags?

[coolmom04]

For the past 2/3 years, we've gotten large tax refunds (3-5K) and we usually spent it on stuff we shouldn't have.. like stuff we'd been wanting but couldn't afford. Once we bought a camera.. or clothes, toys for the kids.. stuff like that. Nothing extravagant though (I don't think).

We fixed the with holdings so that my husband now has the bare minimum taken out of his check for taxes. I don't know how it's going to effect our return this year b/c he did it only 3/4 of the way into the year, but I know it increased our monthly net income by $200.

With that being said, at his currently gross pay, we pass the means test. But, will the large refunds from the past cause problems??

[justbroke]

With that being said, at his currently gross pay, we pass the means test. But, will the large refunds from the past cause problems??

No.

[coolmom04]

No.

Okay. thank you

[justbroke]

Refunds don't cause issues, but may be included as income. If the tax return for the year prior to you filing has a large refund, the Trustee will likely try to hold your case open so that they can take the refund. You may also be required to report the refund as income.

[coolmom04]

Refunds don't cause issues, but may be included as income. If the tax return for the year prior to you filing has a large refund, the Trustee will likely try to hold your case open so that they can take the refund. You may also be required to report the refund as income.

So if I file in March after we get our refund, like we usually do, then I will either have to 1) include it as income or 2) give it up to the trustee.

I thought I read in a thread that NC has something where you can exempt an amount of money or something up to 5K, but I may have misread it and now I can't find it on my own. I can't remember how it was worded so that I can search for it again.

Okay.. I think I just found it. It's the NC wildcard exemption.. for up to 5K leftover from the homestead exemption. Which, I may need the 5K to cover the equity in the vehicle that we own. I don't mind giving the refund up. I'd rather just give it up outright than have to claim it as income though!

[justbroke]

So if I file in March after we get our refund, like we usually do, then I will either have to 1) include it as income or 2) give it up to the trustee.

I think I may be confusing you now.

In your six-month lookback to determine your income, your Trustee (Bankruptcy Administrator) may require you to add the affect of your refund to your income. But don't worry about that part.

What you're asking about now is exempting refunds and the like. if you file your case in March and there's money left over from your refund, then that's when you'd exempt it. Since you're talking about filing in March, you could also exempt the little income tax withheld from January/February using your exemptions. I don't think you will have any issues with this.

[klandsb]

Justbroke. In my 341 the other day NOTHING was mentioned about tax refunds. Is this a good sign that IF I get any back I can keep it ????? This will be the first year that I have no dependants to claim so, as advised by my tax preparer, I upped the amount taken out so I didnt end up owing.

[justbroke]

Justbroke. In my 341 the other day NOTHING was mentioned about tax refunds. Is this a good sign that IF I get any back I can keep it ????? This will be the first year that I have no dependants to claim so, as advised by my tax preparer, I upped the amount taken out so I didnt end up owing.

Is a pretty good sign. You need to see if you remain a no asset case to tell for sure.

If your attorney included your average refund as income, then you probably don't have the refund issue anyhow.