Chapter 13 & Owing Taxes after filing

[NYQTNVA]

I always end up owing taxes - my tax bracket is too high and I have no deductions (well nothing that balances out) My husband and I file 0 and take an additional $20 out and still we owe, but if we aren't able to pay the amount owed, can we add it to the plan or will that be a separate payment if the IRS allows it?

[justbroke]

If you are both filing "married" with 0 exemptions (and additional $20 withholding), then that may be the problem. You may want to file a new W-4 with both employers and check "Married, but withhold at higher Single rate". Before you run and do this, please work with your bankruptcy attorney. In many bankruptcy States, a Chapter 13 debtor receiving a refund must turn it over to the Trustee. You may also want to test the IRS' W-4 withholding calculator to see if that sheds some light for you.

During the first year of your Chapter 13 Plan, you may be able to modify the plan to include the "filing" year's tax issue. You would need to file a motion to modify and also allow the IRS to modify their claim. It's probably not that simple but shouldn't be that hard. If you continue to do this in future years, you really need to talk to the IRS about how to properly withhold or seek professional tax help/advice. I'm not a CPA or any sort of tax professional.

[NYQTNVA]

We worked with a CPA and he told me to do it as i make more, so i am just planning ahead. We divided the amount owed by 12 months, which is where the $20 came from. I know they said we are only allowed to keep 250 if we get a return. My husband filed 7

[justbroke]

Okay, then you are doing it correctly!

[PatG]

We are going to end up owing this year. I spoke to my attorney and he said that we will need to amend the plan. He told me as long as nobody objects to the amended plan, we should be OK. He said he will charge us and our creditors will get a little less than originally planned, but I am OK with this.

[spidge]

I am willing to bet you are not the first who needed to amend a plan to rectify tax issues. I don't make a great amount of money, but simply do not want to send my money off for some to be returned at a later date. We are always close on taxes. OK, maybe not so close some years. Its just plain annoying that the math rarely works out even while using the government created worksheets. For instance this year we will owe the feds about a grand yet get about $600 from the state of California.

I'm considering backing the idea of a flat tax both federal and state just to keep it simple.

If I were you I would shoot for amending the plan, but adjust your withholdings on the high side. This way you won't owe and if in a 100% plan could help you later with extra money toward the plan in forfeited refunds. This could tighten up the budget a bit but help later.

[wd2005]

I knew going into my 13 that I would owe taxes for the following year but I also filed in December so it was easier to calculate. I included what I would owe in the plan but still had to do an "amended" plan after the fact. It resulted in a whopping $9/month increase.