Reminder: October is When Trustees Look for Tax Refunds

[HHM]

This is just a reminder that starting in October, the chapter 7 trustees start going after income tax refunds for the taxes you will file next year. Assuming you live in a state with no exemption (which is most states) Time to start strategically planning your case if you anticipate a significant refund.

Just be prepared, if you file your case anytime after October and if your past tax returns show a history of tax refunds, at the 341 meeting the trustee will have you sign a stipulation to turn over any forthcoming tax refund,

Why October...mostly simple math. For most people, it is too late in the year to change withholding to have any meaningful affect on how much of a refund you will receive.

Note, your case will still be discharged on its normal schedule, but it will stay "open" longer.

[discouraged]

HHM - You've been so helpful today! Thank you.
A quick question - even though I've been unemployed I still had them take out both State and Federal taxes. Last year I received about 1500 back, but I worked part time for 6 months. This year I will only (maybe) work this month and next but I'm still having them take out the deductions. I'm pretty sure this was the correct thing to do. Your thoughts?

[tyson24]

discouraged, are you using MN exemptions or fed? We exempted last year and the coming years returns at 100%.

[discouraged]

For state - MN, for federal - Federal. Just the way I did it when I worked. At that time, I usually got just a tiny bit back claiming 1. Last year I got back a larger amount because I'd put in new windows, storm doors and insulation so got additional refund. Will not get that this year.

[tyson24]

I am sorry i should have clarified. LOL

I meant for exemptions. We exempted our 2010 return (due in 2011) with our federal exemptions. Sorry for the mixup

[discouraged]

No, I didn't exempt. Didn't even think of it.

This whole being unemployed thing is/was so new to me that I just had my taxes done the way I've always done them. Never occurred to me to do them differently

[tyson24]

No I mean we exempted them in our BK petition. We had enough leeway that we just exempted this year and next years refunds. The fed exemptions for BK had a wildcard that we exempted them with.

[discouraged]

Oh-duh - no, I haven't filed yet. Still need a bit more money. I'm not sure we have an exemption on that. MN doesn't seem to have a lot of exemptions. I'm not sure where to look, looked at the us Trustee site and MN bankruptcy code site but did not see a lot of exemptions. Maybe I am missing something. What sites should I be looking at? Also looked at the IRS exemption site.

[discouraged]

I am really, really new at this. Up to this point, I have never not worked and never not paid bills and this site is where I am learning everything I know right now.

[tyson24]

Are you filing singly or with a spouse? And do you have a house with any equity or a lot of assets? If not, you can use the federal exemptions and exempt your cash that way, in bank accounts and tax refunds.

[discouraged]

I am single. I have almost no equity in the house. Bought it 6 years ago as a fixer-upper with Countrywide, which was bought out by BofA, with Chase as a 2nd. Then I took out a loan to remodel the place so it is so underwater it is not funny. I have zilch for assets. All my money has been stuck in this house. All my belongings are from thrift shops, except for the remodeling materials I still have (the trustee can have those if he wants to - lol- wood, insulation and paint. The only real assets I have are the tools I bought to fix the place up.
After being unemployed for over a year, my bank account only holds what I have from unemployment since June. Even there I still don't have the money yet for a lawyer.

So, I will more than likely be able to exempt the tax refund. Thank you, HHH. At least I will have something to look forward to!

I should add that when I bought it, I only put 2,000 down. This was during the time when everyone said - -0- money down to buy a home, so I guess I lucked out here. Plus - I had a good job which more than countered what I had to pay for it. So not much equity.

[tyson24]

Seems like you will be good to go!

That filing fee is a killer for most in this time of distress. I always wondered why we have to pay so much money when we are obviously bankrupt

I hope you figure everything out and wish you a speedy BK and discharge

[discouraged]

Thanks. It's been a real lerning experience on here. WOW. Never knew there was so much to this. At least I know I will never buy another house!

[tobee43]

as always...thanks for the great info!!!

[tobee43]

am i the ONLY one marking your posts as helpful???


come on people...how helpful is this thread and post??????