Changing IRS Deductions After Filing

[LostinMi]

Is it okay to change deductions after filing BK? I have claimed 1 (married w/2 kids)... but would like to change to 9 for the rest of this year to use the extra money to catch up on bills. I won't be in danger of owing taxes when we file.... because I have extra deducted normally. Will this be a problem if I do it prior to the 341 meeting? Should I wait til after the meeting (end of November)? Or not bother at all?

[mrman]

My wife did it for me as in my post, and I can't see why it would be a bad thing to do. If it reduces your refund, they can't get it. A refund is just tax overpayment and in my eyes (like that matters) is part of your income, expense flow. If your bankrupt getting it every week in a paycheck or in april in a refund, it's technicly (sp) the same thing, just not in a lump.

[accentone]

My lawyer actually told us to change ours from 0 to 5.

[LostinMi]

But my question, I guess, is.... Will this change the income statement that I submitted as part of the BK petition?? As it will change my takehome pay?

[StaciMM]

My first thought, Lost, is how much 'extra' do you have withheld and where are you in the process of BK? If the extra withholding is significant, the trustee may question it. (It also depends on your income less expenses on your schedules. If fixing your withholding to 'normal' would not change the end result it may not matter.)

What I'm getting at is: If you have $50 remaining in your BK schedules each month, but you're withholding an extra $150, that means the trustee could see it as you have $200 available to creditors for a 13. (And that is why the trustee can take a % of a tax refund if he/she chooses. If you're getting money back from overpaying, then that is an asset you have already earned as of the day of filing.)

I know that doesn't relate to your question-just thought it wouldn't hurt to mention it. To answer your question, if the trustee doesn't comment over the withholding amount, then changing it should not be an issue. Post filing changes, etc. are not an issue for the BK.

[LostinMi]

Thanks, StaciMM, I think I will wait until after the 341 meeting and then decide if it's worth messing with. We (my spouse) and I currently each claim 1, but have 2 child dependents. We are seperated currently and not sure how we will file 2005 taxes at this point. Usually we get just the child tax credit back each each -- about $2000 and maybe a couple hundred that we overpaid throughout the year. But not sure how it will work this year depending on how we decide to file.

[StaciMM]

Good luck! You'll have to research and figure out what you can & can't claim if you don't file together.

Thanks, StaciMM, I think I will wait until after the 341 meeting and then decide if it's worth messing with. We (my spouse) and I currently each claim 1, but have 2 child dependents. We are seperated currently and not sure how we will file 2005 taxes at this point. Usually we get just the child tax credit back each each -- about $2000 and maybe a couple hundred that we overpaid throughout the year. But not sure how it will work this year depending on how we decide to file.