Okay, I've got a question. I just received my letter from the trustee informing me of what I need to send to him before my 341 (Aug. 11). My question is in regards to future income tax filing. As I was reading the letter, it stated that future income taxes were the property of the trustee to be used to pay off debts. I have approx. $256,000 in liabilities. Whatever monies that I receive for income taxes, how would it likely put a 'dent' in that total, and does that mean that I will always have to give up my income taxes to the trustee. When I first met with my attorney, I was told that the trustee would only take a %-age of my income tax (depending on which month I filed in). Can someone please provide some insight to my future income tax filings. Thanks!!!
-
-
odd, what state are you filing in? i thought that any monies received after you file was nothing to worry about, i sure hope they can`t take future income taxes!!! that is a good question!!! -
You can be held for the year that you file your petition because, technically, that money is owed to you and your BK estate at the time of filing. After this year's refund (which you'll get next year) you'll be free and clear as far as refunds.
In the meantime, adjust your withholding and/or any other methods of reducing so that you get the smallest refund possible for next year. Take the money and run!Comment
-
would it be okay to change your dependents on your paycheck so you will get back more each week rather than year end? and if so, what is the maximaum you can claim, i heard it was 10, but that seems a little steep.Comment
-
Yes, you can change your dependant status, and generally.
As for furture taxes, yes, the trustee has a claim for any 2005 tax refund you may be entitled too. However, the trustee doesn't get the full amount, what they typically do is divide you tax refund by 365 (the number of days in a year), then multiply that result by the number of days from Jan. 1, to the date you file, and that is how much the trustee gets of your refund.
The trustee's job is to find any money or assets that can at least pay something to your creditors.Comment
-
oh i see, thanks for the info hhm. so you are saying that it is okay to change your dependants...right? i just don`t want to do anything that may cause red flags to arise. it seems that you would be commiting fraud wouldn`t it?Comment
-
Oh.. HHM.. this is probably a good time to ask.
Publication 908, IRS states that all BK filers must file a special bankruptcy return. http://www.unclefed.com/IRS-Forms/19...b908/p908.html , Page 2. It also states that we may opt to create seperate tax years within our filing year.(ending the year early- on the day before filing- and then I'm lost!)
Do you know if there is any tax benefit for filers to do so? I can't quite understand what happens during the time between file date and discharge. I'm assuming that the second "year" begins the day after after discharge. Can you help decipher?Comment
-
As a side note-question?
Perhaps creating two short years within this year will help to reduce the amount due to the trustee via refunds??Comment
-
I think the net result is the same. Pub 908 basically is having you shorten you tax year to the date you file, but when the trustee takes your refund, he calculates his entitlement up to the date you file, so I don't think it makes a difference.
Generally, most people just file their taxes as normal.Comment
-
OK.. but, what if...
we're talking about someone whose employment is seasonally based- say, a landscaper in the NE USA- or a roofer who files BK just after their slow or no season? For instance, they file BK in April, having made no or very little money so far this year and then opt to end the year per 908. There will be substantially less money in the refund for that "return". The second return would be out of the reach of the trustee because the first one is dated to end on the day before filing day. Right? Am I thinking clearly on that?
I am so curious now..LOL.. I'm going to have to devote the entire afternoon to reading 908 and it's provisions. I hope nobody here gets hungry.. or needs anything from me :P
I wasn't going to do any work today anyway!Comment
Comment