Did your lawyer use the IRS Expenses allowed as your expenses amount?

[butterflywings]

I need to use the IRS expenses amounts allowed to keep me with no disposable income because of my $7300 tax refund. If I didn't have the refund counted as income I would be in the hole but the refund added another 1k plus to the last 6 months of income.

Will using the IRS amounts raise a flag with the trustee? It shouldn't I wouldn't think because it says on the trustee website that those amounts for your household size can be used without being questioned.

So my question for everyone and please answer tonight as I am seeing the lawyer tomorrow, is did your lawyer use the IRS amounts for the allowed expenses to help with your budget?

Thanks!

[PaKettle]

I'm not sure what my attorney used, he just asked me my cable bill, my telephone bill and my rent and car payment and got the other figures from SOMEWHERE, not from me... But we were under the median - well under - so it probably wasn't much of an issue. And our expenses were probably well under most of the figures in the IRS/DOJ tables.

Ask your attorney, to be sure.

I don't mean to be critical but: You should never be getting a $7300 tax refund! Take that deduction from your check and have it automatically deducted into a certificate of deposit or some other INTEREST bearing vehicle!

I would imagine that you'd better be ready to back up your expenses with some proof just in case... With an added $608/month income (what you'd have gotten if you had not been deducting so much from your paychecks to the IRS), would you have been able to avoid bankruptcy? I would think the UST might ask that...

[lrprn]

PaK is 100% right. You are allowing the government to use your money interest-free instead of having it for yourself over the year. There is no worse savings account than Uncle Sam!

Here's a link to the IRS guide to help you reset your tax withholdings and get your refund back into some interest-bearing account of your own for the years to come - http://www.irs.gov/pub/irs-pdf/p919.pdf

[Lindsay]

I think that Butterfly gets most of her large refund from the Earned Income Credit and Child Tax Credit and state EIC instead of money actually being withheld from her paycheck. I'm not totally sure, but I thought I remember reading that in another thread.

[butterflywings]

I think that Butterfly gets most of her large refund from the Earned Income Credit and Child Tax Credit and state EIC instead of money actually being withheld from her paycheck. I'm not totally sure, but I thought I remember reading that in another thread.

Yep! You are right! lol I could have gotten a small advance throughout the year of the EIC, but it wouldn't have mounted to much and you can't do a darn thing about the CTC. I got a little over 4k from the EIC and 3k from the CTC.

We have our exemptions right on to where we break even with withholding so they aren't keeping any of our money throughout the year.

Just as an FYI, most of these high refunded amounts 3k, 4k, 5k + you hear about are based on these 2 credits and have nothing to do with withholding.

Anyway these 2 tax credits added more than 1k to my monthly income. I'm hoping though that since I am filing BK in Feb that the income computed is only income through Jan, so that this refund is listed as an "asset" and not used as part of the income. Either way though if my lawyer uses the IRS amounts for food etc then we will be fine.

[butterflywings]

I'm not sure what my attorney used, he just asked me my cable bill, my telephone bill and my rent and car payment and got the other figures from SOMEWHERE, not from me... But we were under the median - well under - so it probably wasn't much of an issue. And our expenses were probably well under most of the figures in the IRS/DOJ tables.

Ask your attorney, to be sure.

I don't mean to be critical but: You should never be getting a $7300 tax refund! Take that deduction from your check and have it automatically deducted into a certificate of deposit or some other INTEREST bearing vehicle!

I would imagine that you'd better be ready to back up your expenses with some proof just in case... With an added $608/month income (what you'd have gotten if you had not been deducting so much from your paychecks to the IRS), would you have been able to avoid bankruptcy? I would think the UST might ask that...

National Standards for food, clothing and other items apply nationwide. Taxpayers are allowed the total National Standards amount for their family size, without questioning the amount actually spent.http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

If the US trustee wanted to go against federal law and ask me to pony up the proof on what I spent on food and clothes (which is the two items I was talking about in terms of the IRS amounts I wanted to use) then I can. It'll just be a royal pita, and the trustee will have to look at the checking accounts etc because I've never kept the grocery receipts. For a family of 5 as we are it's not hard to spend what the IRS says is reasonable for family of 5's food budget should be. I homeschool so my children are here all day long; no daily breakfast and lunch at the public school. That adds up let me tell you! lol

My lawyer is the nearby town justice and he works with the trustee all the time so I'm sure he'll know what is best. Also, my refund is based on two tax credits, so there isn't really anything I can do about it. Part of the EIC can be gotten throughout the year but it isn't much and not worth it; the CTC nothing can be done.

[PaKettle]

National Standards for food, clothing and other items apply nationwide. Taxpayers are allowed the total National Standards amount for their family size, without questioning the amount actually spent.http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

If the US trustee wanted to go against federal law and ask me to pony up the proof on what I spent on food and clothes (which is the two items I was talking about in terms of the IRS amounts I wanted to use) then I can. It'll just be a royal pita, and the trustee will have to look at the checking accounts etc because I've never kept the grocery receipts. For a family of 5 as we are it's not hard to spend what the IRS says is reasonable for family of 5's food budget should be. I homeschool so my children are here all day long; no daily breakfast and lunch at the public school. That adds up let me tell you! lol

My lawyer is the nearby town justice and he works with the trustee all the time so I'm sure he'll know what is best. Also, my refund is based on two tax credits, so there isn't really anything I can do about it. Part of the EIC can be gotten throughout the year but it isn't much and not worth it; the CTC nothing can be done.

Thanks for clarifying. I never knew about those kinds of tax credits. I still don't know what they are, but anyway, I'm not getting them, unfortunately! ;-(

I don't think expenses come into play unless you're over the median and you have expenses that are way out of line. If the overall expense figure falls within the ballpark of all the allowed expenses added up together, I don't think most trustees look into it. (Though admittedly I'm just guessing, here, I don't really KNOW.)

I do know that we were under the median and no one ever questioned our expenses, the attorney just filled them in for us except for the fixed ones like rent and utilities.

[Cali]

I would love to get EIC.

[jp2861]

I need to use the IRS expenses amounts allowed to keep me with no disposable income because of my $7300 tax refund. If I didn't have the refund counted as income I would be in the hole but the refund added another 1k plus to the last 6 months of income.

Will using the IRS amounts raise a flag with the trustee? It shouldn't I wouldn't think because it says on the trustee website that those amounts for your household size can be used without being questioned.

So my question for everyone and please answer tonight as I am seeing the lawyer tomorrow, is did your lawyer use the IRS amounts for the allowed expenses to help with your budget?

Thanks!

What did you find out? My lawyer was higher on some of the IRS numbers on my Sch J. I'm not 100% positive but I assume the max IRS numbers may be for the means test and not hardline numbers used for the Sch J. Just curious what you found out about this.

[butterflywings]

What did you find out? My lawyer was higher on some of the IRS numbers on my Sch J. I'm not 100% positive but I assume the max IRS numbers may be for the means test and not hardline numbers used for the Sch J. Just curious what you found out about this.

I am SO happy! The tax refund is not considered "income"; it's an asset so it was not factored into the last 6 months of income.

As for the IRS numbers, my lawyer said we could have used them if we needed to without being questioned at all, and if my expense numbers were higher we could use those too, but I'd have to show proof of them. Although, with not having to factor in another $7300 of income into the equation we didn't have to worry about the IRS numbers at all.

He also said I could keep the entire refund. My husband gets his half, I get to exempt $2500 of mine and the $1150 left over goes towards $800 for the lawyer and $299 for filing fee, leaving a grand total of $51 for the trustee he said. lol He said that lawyer's fees and filing fees is acceptable expenses to be claimed out of the refund and are allowed to come out of what the trustee would have gotten.