Question What are they looking for in my bank statements when i file for bankruptcy?

[amytromp]

Live in NJ and have more deposits in are bank accounts then what are take home pay is, does that matter or will they ask about this. they are all cash deposits from my husband doing side jobs for us to keep up with the credit card bills, now their are no more side jobs,so we have no choice but to file for bankruptcy.will they want to know why we have all these extra cash deposits? we did use all the money to pay all our credit card bills and we have 5 kids, does this matter?

[keepmine]

If, the cash deposits are signficant, expect the trustee to question them.
Nothing wrong with dealing in cash. Just answer truthfully. Your husband isn't the only person in this country doing sidework for cash to make ends meet.

[amytromp]

Really. Because iam afraid to file,we really need to but I don't wanna make my problems bigger. I've searched all over the internet for this topic and cannot find it anywhere,any help would be appreciated. Thanks

[LadyInTheRed]

If your husband was paid in cash in the 6 months before filing, just be sure to include that income in the 6 month look back on the means test. As long as you are not hiding anything, you have nothing to worry about.

If you were planning on not including the cash income on your tax returns, you should reconsider as that income will now be a matter of public record.

[amytromp]

Ladyinthered are u saying I should claim the cash on my tax return this year as self employment income? Do I need special forms for that? Proof? I do turbo tax

[kornellred]

The reason the trustee examines bank statements is to verify that what the debtor is reporting on the various bankruptcy forms is true. A bank statement is a record of your financial activities. If there are money deposits that cannot be traced, the trustee is going to want to know why. Money does not grow on trees, and no one gives money away for nothing.

[LadyInTheRed]

Ladyinthered are u saying I should claim the cash on my tax return this year as self employment income? Do I need special forms for that? Proof? I do turbo tax

Yes, you are supposed claim all income you earn on your tax returns. Even if it's paid to you in cash, it's taxable income. Intentionally not reporting it is tax fraud. The place to report self employment income is on Schedule C of your 1040. If there were any expenses related to the business, you can deduct those on Schedule C. You don't need to provide documentation of the income. If you say you have taxable income, the IRS will take your word for it unless they think you are under reporting it. They are pretty sure you won't lie in order to pay more tax. If you don't report all income and get audited, the IRS would look at your bank statements and ask what all those deposits are. If you claim more income than they see deposits for, they aren't likely to complain.

Turbo Tax includes Schedule C, unless you are using the free version.

[shark66]

@amytromp:

Are you looking to file Ch. 7 or Ch13?

Good luck.

[amytromp]

Chapter 7

[shark66]

Then I'll agree with everything that you've already heard.

Ch.7 usually includes far more scrutiny when it comes to one's financial records than Ch. 13.

Good luck.