top Ad Widget

Collapse

Announcement

Collapse
No announcement yet.

Nervous for tax time! Plus alot of questions

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Nervous for tax time! Plus alot of questions

    We always have to submit our tax return to trustee and luckily have never had to give any up. This year changes have happened…..
    *my wife went back to work part time, but Jan 3rd she will be going full time.
    * started paying for daycare for 2 kids

    i was messing around on turbo tax last nite and we are going to prob get a huge refund of around 10k due to child tax credit, daycare and just new tax codes. ughhhhh, since we can only keep 1500 +child tax money so ill have to hand a bunch over.

    we have told our attorney everything and they just seem to say we will have to wait and see what the trustee does.

    so what is his next move? Will we need to file another schedule I/J? The attorney is hoping they can get it swept under the rug due to inflation and daycare bills but were looking at an addition of 40k thats going to show on our taxes next year. ( this year she only made 7k) so i feel like they say this year wont be bad. We are 31 months in to our 13 so right smack in the middle.

    #2
    I can't promise anything, but I believe most trustees split the refund into two buckets. One bucket contains tax credits which are a government benefit like the child care money and any lingering CARES Act benefits which uses the IRS only as a payment conduit. The rest of the refund is forfeit to the trustee if you're not a 100% plan. See, if you were able to live on your net paycheck just fine, then you should give the excess to the trustee in exchange for the eventual discharge of any unsecured debt left over. It's too late to file a new I/J and use a motion to modify plan to save this year's refund because obviously you were able to live just fine without the money. But your lawyer can file a motion to keep the refund if you have a dire unforseen emergency to spend it on like a leaky roof, broken laundry machines, broken HVAC, or a non-operational car that needs to be replaced.

    As far as your increased income, I wouldn't do a motion to modify if it makes your situation worse. Let them find out and hopefully they ignore it. In my high volume district, motions to modify by the trustee due to normal wage increases don't happen at all. There's just too many cases and most debtors would object causing a hearing if not settled beforehand. But you don't live in my district. So follow your lawyer's advice, which sounds pretty good to me (sweep it under the rug).

    Comment


      #3
      we have been good on the budget this year so no problem with the tax return, just blows that i paid almost 3-4k for daycare which is fully refundable this year due but ill prob end up turning it over. I don't want to make any waves that i don't need to.

      Thats what it feels the attorney is going for so hopefully they wont care now

      Comment


        #4
        Since your wife is going back to work full time, could she max out 401k contributions?
        The 2022 tax return will be submitted to the trustee in 2023. You won't see the money now, but that would protect a portion the income increase, and I don't think it is a violation of bankruptcy law. The trustee may still get more money, sure; but not all of it.
        Also, check if you can max out HSA contributions as well. If you have to do I & J forms again, this will show up on those forms. If there is an objection to the increased 401k contributions, and you and the attorney 'lose that battle', you can turn off the 401k contributions. Consider this process as a business transaction negotiation, not as a commandment or decree handed down from the trustee. Also if you do I & J forms again, check the IRS standards to be sure your expense claims are updated in accordance with current IRS rates, within reason.
        I reworked our I&J forms each year, it seems, to prepare for a battle, just in case.
        Remember the 10% rule as well: if the income of the debtor increases over 10%, then the trustee will be interested. Ours rose around 34% (93K to about 125K: Delta = 125 - 93 = 32 ;; 32 / 93 = 0.344) ) so yeah, I can see why they wanted to raise the payment. Although, they did not get all that they wanted. We did the I&Js, ensured our (increased) expenses were included, etc. So the trustee got about 50% of the increase they wanted. We say, fight for every penny, track, document, and keep records (electronic and paper) of all expenses and income changes.
        Hope all that helps!
        And Happy New Year!
        Last edited by Zombie13; 12-30-2021, 07:33 PM.

        Comment


          #5
          Not sure if she can since she did not contribute before the bk but we will look in to it. This year the income is gonna go up about 15% with my raise and her part time hours. 2023 the income will jump like 50% yikes! But every time we call the attorney they never seem worried. I think they are actually waiting to see how bad inflation hits because she made a comment about it.

          Comment


            #6
            If her employer has a contribution match, my understanding is that is enough to justify contributing up to that limit.
            Latent car nut.

            Comment


              #7
              Ill let her know to start the process,

              Comment


                #8
                Run it by your attorney just in case, let them know your intent. Also - with the 401k, there may be an option for a '401k manager' company hired by your wife's company, to manage the 401k at a very minimal cost, versus a 'generic selection' offer. I made that 401k manager selection last year and it's worked well so far. At this point I don't have time to learn about stocks trading etc. so it's a good option for us; maybe later I can consider another way.

                Comment


                  #9
                  Check with your attorney. Last year our Trustee did not require 2020 Federal Tax refunds to be sent to them due to COVID. Not sure if this on a trustee-by-trustee basis or state-by-state basis.....but just something to throw out there.

                  Comment


                    #10
                    Originally posted by mh321 View Post
                    Check with your attorney. Last year our Trustee did not require 2020 Federal Tax refunds to be sent to them due to COVID. Not sure if this on a trustee-by-trustee basis or state-by-state basis.....but just something to throw out there.
                    I wish it was, last year they sent us a letter saying we had to turn over all of the refund. After calling our attorney they made an error and we got to keep $5500. 😥

                    Comment


                      #11
                      I didn't want to start a whole new thread for one question but say since my wife is working now and the trustee wants more money. Can we elect to just have more money taken out of my check and avoid having paperwork sent to her work? Or could the trustee order them to take x amount from hers and mine?

                      Comment


                        #12
                        If you filed jointly, then I suppose the Trustee could seek a wage deduction order (WDO) to your spouse's employer. If you filed solo, then the Trustee shouldn't need to, and shouldn't be able to, obtain a WDO for the non-filing spouse.

                        I really can't answer if, if you filed jointly, whether the Chapter 13 Trustee would allow a WDO to come solely from your employment.
                        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                        Status: (Auto) Discharged and Closed! 5/10
                        Visit My BKForum Blog: justbroke's Blog

                        Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

                        Comment


                          #13
                          Yes we filed jointly, this is the first time she has worked since about 8 months before we filed. Guess we shall see how it goes

                          Comment


                            #14
                            Check with your attorney. Our BK payment has come from my paycheck they went with mine and mine only since I make more money than my husband. They did not even think about taking some from mine and some from his when I asked the attorney he basically said they would only take it from mine.

                            The court/trustee might just notify your work place that the payment is increasing as of a certain date and then more will be deducted. Our plan had a step to raise the payment at a certain time and when that happened they sent a notice to employer and my attorney also had me contact my employer (I sent the document via email to my HR person) since the mail has been slow during this pandemic era.
                            I am not an expert. I just share my experiences in the Wonderful Wacky World of Chapter 13! Filed 3-30-18 Confirmed 7-11-18 Discharged 6-8-22

                            Comment


                              #15
                              Carmella Im hoping they do this less paperwork and headache for my wife. We still have to file our taxes and submit them to the trustee to even see if they will take more. The attorney says they may be nice with inflation and daycare costs. My plan stepped up from the original plan to the confirmed plan but it was only $23 extra a week they jumped it.

                              Comment

                              bottom Ad Widget

                              Collapse
                              Working...
                              X