Tax refund question - chapter 13

[lolly78]

Hello all,

Just a quick question...

We filed chapter 13 last week. I read a post that indicated that someone's 341 got delayed until they filed their income tax return so I figured I better get it done. Filed over the weekend and we are getting $2500 back. (Mostly because I sold most of my securities at a loss last year trying to keep up will all the debt - dumb move)

Today I received my notice of chapter 13 bankruptcy case in the mail. The IRS is my one priority debt and I've been on a payment plan with them for about a year. Will they automatically take my refund since I owe or does the automatic stay apply and they can't take it?

If the IRS doesn't take it, it is scheduled to hit my account on the 18th. Would it be ok to use that money to pay my april mortgage before my 341 which is scheduled for the 30th? It would just be nice to get ahead of my mortgage for once in months!

[espo1357]

Hello all,

Just a quick question...

We filed chapter 13 last week. I read a post that indicated that someone's 341 got delayed until they filed their income tax return so I figured I better get it done. Filed over the weekend and we are getting $2500 back. (Mostly because I sold most of my securities at a loss last year trying to keep up will all the debt - dumb move)

Today I received my notice of chapter 13 bankruptcy case in the mail. The IRS is my one priority debt and I've been on a payment plan with them for about a year. Will they automatically take my refund since I owe or does the automatic stay apply and they can't take it?

If the IRS doesn't take it, it is scheduled to hit my account on the 18th. Would it be ok to use that money to pay my april mortgage before my 341 which is scheduled for the 30th? It would just be nice to get ahead of my mortgage for once in months!

My plan allows them to take the refund (I am in a 13).

what you should do is file 10 dependents ( you can do this legally), so that it is likely that you will owe money at the end of the year. also, forget the 401k while in a 13. Why give them anything extra?

Sorry to bring you bad news, but run it by your lawyer and hopefully it will be different for ya.

[noey]

Yes.. they will take your amount owed from your current refund.

[irishonyx33]

what you should do is file 10 dependents ( you can do this legally), so that it is likely that you will owe money at the end of the year. also, forget the 401k while in a 13. Why give them anything extra?

I thought it was a no-no to owe taxes while in a 13?

[vicmost]

I thought it was a no-no to owe taxes while in a 13?

It's okay to owe taxes as long as you're current on your filings. The debt is listed in your plan as a priority claim. Meaning that they must be paid back 100% and I believe they are paid first. On my petition they are listed on Schedule E - Creditors holding unsecured priority claims...
Death and taxes-There's no escape!
I'm sure some of the Guru's will know a bit more.

[lrprn]

The IRS is my one priority debt and I've been on a payment plan with them for about a year. Will they automatically take my refund since I owe or does the automatic stay apply and they can't take it?

Because you owed the IRS when you filed and the IRS is a priority debt that will be paid in full before the end of your plan, chances are your trustee will receive your refund. Your trustee will then apply the refund to what you already owe the IRS. I wouldn't count on getting the refund.

Would it be ok to use that money to pay my april mortgage before my 341 which is scheduled for the 30th? It would just be nice to get ahead of my mortgage for once in months!

If you didn't already have the IRS as a creditor in your Ch 13 plan, whether you would get $2500 back yourself depends completely on your trustee. Some take all of the refund throughout the life of your plan, some trustees allow you to keep a certain defined number of $ and take whatever is over that, and a few don't care about refunds. There's no consistency at all across the country.

Ask your lawyer what to expect now that you've filed.

And for heaven's sake, if your trustee allows it, adjust your withholdings now for this year so you'll get just a small refund back next spring. Uncle Sam makes a terrible savings account. This will also give you more available cash every month.

Here's an online IRS website that helps calculate the appropriate number of withholdings to control your national tax refund better next year - http://www.irs.gov/individuals/artic...=96196,00.html. Remember to calculate what your state and (if applicable) local taxes will be as well.

The goal should be to end up with as little refund as possible owing nothing to Uncle Sam and nothing your trustee can take

[irishonyx33]

It's okay to owe taxes as long as you're current on your filings. The debt is listed in your plan as a priority claim. Meaning that they must be paid back 100% and I believe they are paid first. On my petition they are listed on Schedule E - Creditors holding unsecured priority claims...
Death and taxes-There's no escape!
I'm sure some of the Guru's will know a bit more.

I mean after you're already in your 13...wouldn't the Trustee want you to adjust your withholdings so you don't have tax owed every year?

[Pandora]

You never want to owe the IRS money - so if you use an accountant - have him/her run an analysis based off of this years earnings / taxed amounts / etc - and change the exemptions until you either break even, or end up with a refund of $1K or less. Then provide all info to your lawyer, and see if your trustee will allow an adjustment accordingly. If you dont use an accountant and do them yourself, play with the software you use doing the same thing above.

CH. 13 is hard enough, no sense in having to come up with extra monies to pay taxes.

[mylife]

We received a refund which was applied to a tax debt we owed from 2008 which was included in the plan. The refund paid all but $10 of the balance but leaves several hundred dollars left from penalties. Will the penalties be included in the plan or is it worth asking the IRS if they can be waived?