Line 25 Means Test - Taxes

[InSeriousDebt77]

I've seen some posts on how technically this line is supposed to show taxes "actually incurred", and not necessarily total taxes withheld on your pay stub. I just spoke with my attorney and she is using taxes withheld (from my pay stub), and is insisting that this will be ok to use. However, it certainly makes sense to me that this line should only be taxes incurred, especially if you typically receive a refund.

Is there anyone out there who is was\is an above-median filer, and whose lawyer used this same method and had no issues? I am a little nervous that what she is doing is incorrect and will come back to bite us, yet I am thinking that maybe this is something that varies from district-to-district, and I should just go with what she says?
Her boss is also a Chapter 7 trustee for what it is worth

Thanks

[almost]

Don't know on this one, but the taxes were taken from your pay with in a cal year, you don't get the refund till the following year. So really if you think about it your refund is income the next year. Even though it is a over payment on you taxes
I think you will be OK, the trustees look at the refund as upcoming income to be taken if not recieved yet.

[JRScott]

My lawyer used what my paystubs said was taken out when I filed.

[InSeriousDebt77]

Thanks...and did you typically get a decent sized refund every year?

[JRScott]

2007 was my largest return ever I think it was around 500 or so, this year is the same. I"m single no children so I get hit hard by the taxman .

[InSeriousDebt77]

My refund has typically been larger, around $8000 or so. Here's hoping that my lawyer is correct...

[jnjw]

That's how our atty did it, taxes taken out of check, and yes, we "used" to get very sizeable refunds every year.

[diviaruba]

My refund has typically been larger, around $8000 or so. Here's hoping that my lawyer is correct...

A lot depends on district, less so on UST, least on 7 trustee. However, $650 plus per month is a big number, especially if you above median and are subject to a higher level of scrutiny.

How does it look for you if you back it down to actual tax liability, i.e. add the $650 or so into the disposable income shown on Line 50 of the B22A?

[diviaruba]

Don't know on this one, but the taxes were taken from your pay with in a cal year, you don't get the refund till the following year. So really if you think about it your refund is income the next year. Even though it is a over payment on you taxes
I think you will be OK, the trustees look at the refund as upcoming income to be taken if not recieved yet.

Gross income is gross income, applicable to parts II and III of the means test - are you above the median income for your family size in your state. Not much you can change about that. Pass that, and you're on the road to OK.

The tax issue comes into play when calculating disposable income for the above-median debtor - Do you have enough left over each month to fund a Chapter 13? This is where you will get special scrutiny, because in spite of the IRS standards for certain expenses, the expense side has the most opportunity for tweaking. The US Trustee's office WILL analyze the expense portion of the form very closely, looking for "extra" disposable income in an effort to find at least $182.50 per month - the amount needed to check the box that indicates the "Presumption of Abuse Arises", forcing a motion to dismiss or convert.

That is why they are on this earth, and some do the job with extra gusto, particularly in districts that have been "friendly" to their efforts.

[InSeriousDebt77]

If I used my actual withholding on line 25, and plug in the $650 or so into line 50, I am still negative by about $80. So that seems to indicate I am probably ok either way.

As part of the taxes, you also have to include deductions Medicare and SS, right?

[diviaruba]

If I used my actual withholding on line 25, and plug in the $650 or so into line 50, I am still negative by about $80. So that seems to indicate I am probably ok either way.

As part of the taxes, you also have to include deductions Medicare and SS, right?

Sure, plus state & city wage taxes (where applicable), personal property taxes (like car tax, intangibles tax - not real property, if it's included in your mortgage).

[Mom2one]

We'll soon see. We see an attorney on the 23rd. Thanks for taking the time to send the link!