Need Advice - Tax Refund

[jnjw]

I'm hoping some of you here can offer me some advice on what to do.

My husband and I filed Chapter 13 on 12/06 and we had our 341 meeting on 01/25. Before filing, I asked our atty about our tax refund because I had been reading here and another bk board and that's how I find out that the trustee can take our refund (before that, I had NO idea). The atty said he hoped that the trustee didn't mention it at our 341 and if that she didn't mention it, to file, get it, and spend it on necessities (which is what we always use it for), and to save the receipts. And that we didn't have enough left to cover it with an exemption.

At our 341, the trustee did not ask about a refund, didn't mention a refund, but she did require us to sign a form giving our permission to the IRS to send her copies of our '07, '08, and '09 tax returns. Since she didn't mention it, after the 341 I again asked the atty is it okay to spend it? He said yes, necessities, keep receipts.

We usually get a sizeable refund (appx. $6,000) and I expect this year to be no different, maybe a tad bit less but not much.

Our trustee determined us to be a business case since I am a 1099 contractor/self-employed. So every month, I MUST send her an income/expense report and copies of our bank statements by the 15th.

I am getting ready to send our paperwork to the accountant. Usually we e-file and direct deposit. I know that it's still going to be at least 2 weeks before we e-file because I see no problem with e-filing, right?

Here is my dilemma.

Do we go ahead and e-file and ask for direct deposit? Or not e-file and ask for a check to be mailed? Or do we e-file and ask for a check to be mailed?

I am afraid that if the trustee sees our monthly bank statement and sees this huge deposit from our tax refund, it's definitely going to catch her attention. But I feel like if I request a check, that I'm being "sneaky."

We really, really, really need this money or at least part of it. I have property taxes due next month and I have no idea how I'm going to pay them without it. I need new tires, which will cost at least $500. We need pellets for our pellet stoves for next winter, which will run about $2,000. We need propane gas for our tank. I need new glasses and our children and I need to see the dentist. I would also like to get a head start on buying school clothes for next year. I mean it's not like I am going to spend the money on luxuries here.

I know that she still has time to send us a letter requiring us to fork it over, so if that happens in the meantime, I guess the above questions are moot. But I would like to have my bases covered here just in case she doesn't.

Any advice? What would you do?

[helpless]

we efile and have return mailed to us. Trustee told us to do it that way. He said that way it didn't raise a flag in the system. Don't know what he is talking about, but that is how we have done it the past two years. I can't wait until next year because we will have this over with and not the added stress of whether or not we will get money back.

[MajorMike]

First of all, make sure RIGHT now that you change your tax withholding. You DEFINITELY want as little a refund as possible for next year so that you don't have to worry about those things. I don't know why people don't reduce that in a Chapter 13.

[jnjw]

Well, I didn't realize until it was too late that we were going to need to adjust the withholding.

Husband received a letter like at the beginning of December, I think, from his company stating this was his one shot for the year to change his withholding. Since I didn't realize there was going to be a problem, we didn't adjust and now, it's too late to do so or at least that's what the letter implies, that if you didn't do it at that time, you couldn't do it until next year. I am going to have him ask at work, though, because that doesn't make sense to me.

BUT with the trustee seeing our bank statements every month because I don't have a separate business account and all of our money goes into one checking account, she will see a raise in his deposits from work, which will cause a problem, I'm sure, because she will say we've got more disposable income and raise our monthly payment.

[jnjw]

we efile and have return mailed to us. Trustee told us to do it that way. He said that way it didn't raise a flag in the system. Don't know what he is talking about, but that is how we have done it the past two years. I can't wait until next year because we will have this over with and not the added stress of whether or not we will get money back.

Thanks! I am thinking that that's what we're going to do - efile and request a check instead of direct deposit and just spend it in cash form and keep receipts. We need that money and a lot of this stuff, for whatever reason, was NOT added to our budget, leaving us no room whatsoever for necessities. I mean we've got to have heat for goodness sake!

[woeisme]

My trustee lets me keep any tax refunds under $6500. He specifically said that I could not get my refund back electronic deposit though. I can e-file, but need to get a physical paper check for some reason. So our trustee is telling us the same thing helpless's said to him/her, so I would be sure to get a paper check and not electronic deposit.

[jnjw]

Well, sorry to have wasted your all's time.

I checked Pacer just a second ago and the Trustee filed something this morning called Trustee's Recommendation Regarding Confirmation and Objection to Plan, and in that, one of her objections is that our monthly expenses are covered and our tax refund is a "virtual savings account" and she wants it. GAH!

[bmcmull]

Well, sorry to have wasted your all's time.

I checked Pacer just a second ago and the Trustee filed something this morning called Trustee's Recommendation Regarding Confirmation and Objection to Plan, and in that, one of her objections is that our monthly expenses are covered and our tax refund is a "virtual savings account" and she wants it. GAH!

Listen carefully, E-file now and have it deposited in your account. You just confirmed and it usually takes a few months for that peperwork to get processed at the IRS. Once you are tagged the money goes straight to the trustee. Its next year you'll have to adjust your return to get you under the trustee's number. Our is 2K. Yo can alway's go back and re-file up to 3 years after that tax year. ie. your 2008 return can be filed in 2009 and ammended in 2012. Long after the BK is over. I just filed standard deductions and no child tax credits like day care expense etc.

[jnjw]

Well, I don't think I can do that. We haven't confirmed. The trustee is objecting to confirmation. And it has this whole paragraph about why she wants our tax refund, and that she will be requesting a transcript from the IRS on April 15, '08, which she can do that because we signed forms at the 341 last month giving the IRS permission to send her a transcript.

I think if I did that and spent the money, it would be a sure fire way to get us dismissed.

[bmcmull]

Sorry I just got back today on the net. I still think because she is requesting the transcripts be sent to her it will still be next year before she gets anything. I confirmed in March of 2004 and filed in april. She has tagged my IRS transcripts but she only started recieving them in 2005. Its just a gamble I guess . Good luck

[shortee]

we also have an objection of payment plan going on and our case had yet to be confirmed. Before we filed our taxes we received a letter from the trustee stating he wanted copies of our tax statements.

We asked our lawyer/attorney about it and he told us to send them the copies. This is a normal thing. So we did! We also asked our attorney/lawyer NUMERIOUS of times just to be sure the taxes would be ours to keep. He insisted yes it WAS NOT in our plan. Well guess what we received the day after we spent the money on our real estate taxes. A letter from our trustee stating he wants half of our refund. UM where the heck are we going to get that money its gone already. We always pay our real estate taxes with it. Our attorney said that the trustee is totally wrong. He also mentioned that our case isnt even confirmed yet so he shouldnt be asking for it.

I'm sitting here in tears and freaking out for the last week and of course we havnt heard any new news.

So what Im trying to get at is DONT spend the money until you are 100% sure that darn trustee dosnt want it.

[jnjw]

Well, I haven't even filed our taxes yet. And the trustee will get a transcript if we go forward with this 13 because she had us sign forms to get transcripts of '07, '08, and '09 tax returns and her letter said that she will request our '07 return from the IRS on April 15, of '08. Whatever! I'm hoping to get our case dismissed and file a 7 anyway. So I am going to file my taxes next week and hopefully by the time we get the check, we will have been dismissed or converted. I haven't talked to the atty yet since he hasn't returned my phone call from Friday about this issue and some others issues that we have!!!

Shortee, don't panic yet! I have seen other people state that they had receipts and sent a copy of the receipts to their atty to forward on to the trustee when something like this happened. Youd need to get in touch with your atty asap. He might be able to exempt it if you filed recently as well. Good luck!

[wooisme]

Hey, jnjw...question for you. your self employed a 1099 ...so am I what state are you from?

the income you made naturally you dont' know what you really make until the end of jan when you get your stuff in the mail. Are you writing off business deductions to go against your 1099. if you made over a certain amount of money, if you are able to write off most of it as a business exp, (if you have the receipts, or canceled checks, or bank statements to prove it) you could at least find a way to chop down your income.

[jnjw]

Oh, yeah, I keep receipts and my accountant works magic on our income tax returns. However, my husband pays in so much in federal taxes throughout the year that with getting our AGI down extremely low (with all of our deductions), we still get, on average, $6K every year in a federal refund. He has been off work this week, but as soon as he goes back, I'm having him ask about adjusting his withholding. From what I gathered from a letter his employer sent out in early December, the employees can only change their withholding ONE time per year, but I don't think that sounds right.

The thing about it is - I only make 15% of our total household income! Without my husband's income, I would be considered below poverty level. I don't even pay any taxes throughout the year like a lot of 1099 contractors have to do, if that tells you anything.

[wooisme]

I pay in estimated taxes $6000 ...$1500 per quarter, now I DO have to send them in to the trustee when i pay it so that he see's Im making that payment.

It sounds like the way we use to be before my husband retired.

what state are you from