Salary Increase from Experince Question Income Tax Refund

[eltaur2000]

The consensus here seems to be that you need to get to a 5 to 10% increase before it is considered significant. But, a trustee has the right to go after any permanent increase in your disposible income. Your attorney should be able to give you a better idea of what your trustee considers significant. But, he may also prefer to remain vague, because a trustee can change his practices if he feels like it. If the attorney tells you the trustee won't go after an increase in income under 10% and then the trustee goes after your 3% increase or your bonus, you're going to be mad at the attorney.

Whether I get to keep my refunds is absolutely no indication of whether you will be able to keep yours. There is nothing in my confirmation order requiring me to turn over my refunds to the trustee. My trustee does not require that debtors send her copies of their tax returns every year, so she won't even know about my refunds. But, I am mindful of the fact that I could receive a letter from the trustee at any time asking me to start sending copies of my returns or for any other financial information.

Your 2011 refund is a different issue. If you file BK before you receive and spend it, it will be an asset of your estate that you need to exempt. If you can't exempt it, you can keep it, but it will be part of your Chapter 7 liquidation test (i.e. your Chap 13 plan must provide that your unsecured creditors receive at least what they would if you filed a Chap 7 and your non-exempt assets were liquidated).

What if I file in March and got my refund in Feb? Can I keep the funds in the bank or will they be considered assets? Can I with draw the funds? Will it be questioned? Can I claim I blew them gambling?

[eltaur2000]

As far as income tax goes, your best bet is to adjust your withholdings so that you come out as close to "0" as possible at tax time (no refund and no owed amount). Then whether or not the tt seizes your refund will be a moot point as there will be no refund--you'll get that extra money in your paycheck each month.

Momo do you do this after you are filed or before you file? The salary they will be evaluating will be the prior 6 months correct. So If I change withholding after I file will get more money in my check. If I have to turn over my tax refund it wont be much none at all correct?

[momofthree]

As far as income tax goes, your best bet is to adjust your withholdings so that you come out as close to "0" as possible at tax time (no refund and no owed amount). Then whether or not the tt seizes your refund will be a moot point as there will be no refund--you'll get that extra money in your paycheck each month.

[LadyInTheRed]

He said the trustee would be looking for a signifant increase in salary? What is considered significant is my question?

The consensus here seems to be that you need to get to a 5 to 10% increase before it is considered significant. But, a trustee has the right to go after any permanent increase in your disposible income. Your attorney should be able to give you a better idea of what your trustee considers significant. But, he may also prefer to remain vague, because a trustee can change his practices if he feels like it. If the attorney tells you the trustee won't go after an increase in income under 10% and then the trustee goes after your 3% increase or your bonus, you're going to be mad at the attorney.

What about your tax refund lady? Did you get to keep it?

Whether I get to keep my refunds is absolutely no indication of whether you will be able to keep yours. There is nothing in my confirmation order requiring me to turn over my refunds to the trustee. My trustee does not require that debtors send her copies of their tax returns every year, so she won't even know about my refunds. But, I am mindful of the fact that I could receive a letter from the trustee at any time asking me to start sending copies of my returns or for any other financial information.

Your 2011 refund is a different issue. If you file BK before you receive and spend it, it will be an asset of your estate that you need to exempt. If you can't exempt it, you can keep it, but it will be part of your Chapter 7 liquidation test (i.e. your Chap 13 plan must provide that your unsecured creditors receive at least what they would if you filed a Chap 7 and your non-exempt assets were liquidated).

[eltaur2000]

He said the trustee would be looking for a signifant increase in salary? What is considered significant is my question? What about your tax refund lady? Did you get to keep it?

[LadyInTheRed]

Guest123, is right. Every district, trustee and case is different. What was the textbook answer your attorney gave you?

[Guest123]

IMO you would be better off with your lawyers answer. Here you will get every different answer under the sun and will just confuse you.
For instance there are some that get larger raises and bonuses and the trustee doesn't care as long as you keep to the plan. Then there are those that will take what ever extra they can. All dependant on the trustee and your lawyer should know them better then anyone here.

We were told if we don't make waves the play will ride thru with no issues...meaning missed payments.

[eltaur2000]

My DMI will be between 600-650 a month including my $391 Car payment.

I get a 3% raise every year. It usually means like $60 a month? Is this something the Trustee could require the following year when they see the increase on W2's.?

I'm filling either mid Feb or March my raise does not kick in till the first check in March. Taking into consideration the prior 6 months it will not be on the books.

I also get like 1k bonus every year around March. This will mean an additional like $60 a month. Will the Trustee come after this on Year 2?

My attorney gave me a textbook answer but I want personal experince answers.

What about income Tax? Is this in the plan from the begining or are exposed to the Trustee decision every year?

Is this something that's either yay or nay or can the trustee decide year 2 they want to keep the check?