Does How Much Under Median Matter

[RickInMich]

Hi,

I have the type of job where in addition to my salary, I receive 1099 income based on specific jobs I complete. We require a deposit payment in advance on these specific jobs. However, I generally don't cash the check until the job is completed. Currently, I have a $2,000 check dated 10/06 on one job. I probably won't complete the job until late December, possibly early January.

If I have to include that $2,000 in the last six months for income, it will really mean $4,000 more for the year because they double the six-month figure. Even with that 4,000, we are still about $16,000 under the median income for our family size in Michigan. Because things a REALLY tight right now, I'd like to cash that check. But my question is, is it better to be even more under the median? Should I wait to cash the check? Do I have to declare it anyway since it's income earned, but not received? (Actually, though it's not earned yet.)

Thanks for any help on this.

[jp2861]

The $2000 will count in the total for the last 6 months. Based on the date of the check, you'd be including that amount in your 2007 IRS taxes? Even though you didn't finish the job it's probably going to be looked at as an advance. There may be a loophole or some play on words (deposit versus advance) that a lawyer can assist you with. If you still have the check I'd be willing to bet the trustee will take it. If they are willing to wait for a tax refund they'll definitely take a check that you already have. Best to have a lawyer give you a definite answer though.

It doesn't matter how far under the median you are. It's a GO or NO GO computation.

[jbr12]

I too am in Michigan. I currently have a family of 3 and am just under the median income. We have a baby that will be here in the next couple of weeks and we asked the lawyer if we should wait until our family increases to 4 to put use waaaay under the median income and he said it doesn't matter. If you're under and you can pass the means test, thats what matters.

[CindyLou]

Yes, its the date of PAYMENT (date on the check), not the date you cash it that is correct.

[SinkingFast]

If you're under and you can pass the means test, thats what matters.

On the Means Test,............ Your attny will get to Lines 13 and 14 where your actual earned income is compared to the Median. You're under, so Line 15, the box for "Presumption does Not Arise" will be checked and the Means Test is done.

From there, you move to Schedule I, actual earned income, versus Schedule J, you actual expenses to live. As long as I vs J comes in at $100 or less per month in disposable income, you'll be fine.

So, No, it doesn't matter how far you are below the Median. The Court is really gonna look to I vs J. And if you have less than $100/mo in disposable income left after normal living expenses, you're good to go.