2007 Tax Returns

[getouttadebt]

The Office of the United States Trustee asked for my complete Federal and State Tax Return for 2006. They were satisfied after reviewing and no futher questions have arisen. We used our leftover Wildcard to protect $10k worth of Tax Return money in 2007. We are supposed to get back a little more than that when combining Federal and State.

At my 341, no questions came up about a Tax Refund. My attorney says they didn't ask because we protected it. My attorney says because we are over what we protected that I should wait to file until April 15th. Assuming I get my discharge on 5/5/08, my attorney says the Tax Return is a non issue.

I assume they could always come back and ask me for my 2007 Tax Returns until the case is closed which would be after May 5th. Who thinks I should just file an extension on my 2007 taxes and then file once the case is closed? Or should I just take my attorney's advice and file on April 15th?

getouttadebt

[epiphany]

Well, I'm fairly new to all this so maybe someone with more experience will chime in but the question that puzzles me is:

If your attorney thinks there is a reason to wait until the last filing day, then why wouldn't he suggest getting a tax extension and filing after your case is closed just to be safe?

My thinking that if there is a good reason to wait until the 15th, there is a better reason to wait until after the case is closed. Unless the trustee asks to see your 2007 return, I would wait.

The odds are probably in your favor if you file on the 15th, but you are still taking a chance IMO.

Getting a tax extension is easy and you can do it online. Bear in mind too, that waiting to file your 2007 taxes will also delay your stimulous payment.

Good luck,

ep

[2confused]

Anyone have more info on this...I filed on feb 27, 2008. My attorney put a possibe 8,000 tax return in petition and we still qualified for a 7...but just to be safe, i filed an extension, what is the likelihood that this might delay discharge? trustee didn't ask about it and has already said "no asset" case? A

[gophermn]

I had the same issues. Trustee wanted 2006 & 2007 tax returns and like you, my attny said I was protected. But he also said to TRY NOT TO SPEND the tax return until after discharge.

Keep in mind there is a lot on the tax returns Trustee's look at besides your return (employment, wages verification, stock, 401k, expenses, deductions and business exp). SO YES I am sure they look at your refund but I would bet bottom dollar they are looking for other forms of abuse - and what better to find that - than in your tax filings..

Good luck!

[2confused]

So, you did file instead of doing an extension? Did your trustee bring it up at the 341? Have you heard anything?

[getouttadebt]

I was the one that started this thread. I ended up filing in late March and already got my refund. I put most of it in savings just in case it comes up until my case is closed. If you file an extension then you might possibly delay your case. If they come back asking for it and you already filed an extension, then they will likely keep your case open until they look at your 2007 returns.

I can't advise you on this, but I see no harm in filing -- just make sure you don't spend all the money until your case is closed.

getouttadebt

[2confused]

I've been reading forum and some people said that the ustrusee must object within 10 days, but it looks as if yours took a month, is that correct?

[getouttadebt]

The UST must file a Statement of Presumed Abuse within 10 days of the 341 -- which he did in my case. I have heard that this is mandatory for anyone well over the median income. Then they have 30 days from that date to file a Motion to Dismiss or state a reason why they are not seeking dismissal. Unfortunately, he filed a Motion to Dismiss but all his reasons are incorrect. My attorney suggested we oppose the motion which is what we are going to do. If we lose, my attorney says he will not charge me a fee to re-file and then we would re-file the case on June 1st (of course I have to pay the $299 filing fee if we have to file a new case). But, sounds like a money back guarantee for me -- I believe I qualify for Ch. 7 and do not intend to get pushed into Ch. 13 if at all possible.

getouttadebt

[laurannm]

So are you saying it's possible that they may want your 2006 and 2007 REFUNDS as well? We should be able to exempt our entire 2007 refund and stimulus check, but definitely not our 2006 refund

[2confused]

So, since i did not recieve a statement of presumed abuse and its been 18 days, does that mean we are in the clear from the us trustee?

[lrprn]

So are you saying it's possible that they may want your 2006 and 2007 REFUNDS as well? We should be able to exempt our entire 2007 refund and stimulus check, but definitely not our 2006 refund

When you file Ch 7, your trustee can't go back and get more than part of one year's refund - here's why.

When you file Ch 7, your trustee can make a case that the portion of the refund you earned between filing and closing belongs to your bankruptcy estate. If your refund amount is high enough, your trustee may ask for the portion he/she is entitled to have as the administrator of your bankruptcy estate.

For example, let's say you filed Ch 7 in October 2007. Normally your case would discharge and close in January. Your trustee discharges your case but leaves it open to see how much of a refund you get back in April or May 2008 because the portion of the refund you earned during the last three months of 2007 belongs to your bankruptcy estate.

If you get a smaller refund of less than $1000, it's not worth coming after three months worth = $250. However, if you get a refund of $5000, then three months worth = $1250 is more likely to get taken.

Does this make more sense now?

[laurannm]

I believe that makes sense...thanks!

So in my case, if filing in July, can they potentially leave my case open until next year in order to try and claim the refund earned from Jan - July? My refund this year was $7700 (I know, very bad and I would expect something similar next year (until I change my withholdings anyways)

[2confused]

What is the liklihood that they will hold up my discharge because i filed an extension? (The refund was included in the petition) and am i in the clear from the us trustee if its been 18 days. I would start a new thread but can't figure it out. It use to work on thread tools but not now?

[getouttadebt]

You are probably ok -- especially if you have a pretty basic case. The more complex cases with multiple open issues might delay because of an extension on filing taxes. This is just my opinion, though.

getouttadebt

[2confused]

Well my husband is self-employed which can complicate things.