Taxes....Questions!

[Panacea]

Please hang with me, because I'm not to educated on taxes. I have always loved the refund part of my taxes, but now am seeing things differently due to this BK and finally paying attention to my financial life.

So, if I file BK end of Oct, 341 most likely would be early Dec.

My tax refund last year was approx 5000.

1. I have not changed by W4 since I began working. I claim only 2 allowances for me and my child. Now I'm seeing that I should be claiming maybe 1 or 2 more, due to being head of household, etc.

2. I am now surrending the house, so any extra I got back for years for that will be gone.

Questions...
Once the trustee sees my past refunds, will they go for the one I will be receiving early next year? I'm worried since 341 will be in Dec.

Should I change my W4 for more allowances? I'm thinking I should, but don't want to "rock to boat" at the 341 or before I'm hopefully discharged.

If I do change the W4, I don't want to owe at the end of the year. But I would, in the future, like to see more on my paycheck instead of using this deduction as my "personal savings account" to get back once a year.

Any help would be greatly appreciated. I have never thought I had too much taxes taken out each paycheck since its been the norm for so many years.

[Pandora]

Because you are surrendering the house - I would not change your exemptions at all. You get back so much because you get to write off interest paid on the house, as well as real estate taxes every year. I'm sure you also get the $1K child tax credit if your child is under the age of 16 as well - so take that into account.

If you have your taxes done by an accountant - ask him/her to run the numbers without itemizing and see where it lands you. If you do them yourself, then just do the same thing - no itemizing, just take the standard deduction.

You almost have to wait to see before you change anything because you definitely do not want to end up oweing

[Panacea]

Thanks! I did think the house was a major part of that refund.

But for example just talking about income....my gross monthly for 6 months was 4700 approx, and my taxes monthly were 1032.00. A bit high?

[Pandora]

Thanks! I did think the house was a major part of that refund.

But for example just talking about income....my gross monthly for 6 months was 4700 approx, and my taxes monthly were 1032.00. A bit high?

No - it sounds right with you claiming 2. If you do the math you're paying in approximately 22% in taxes. That sounds about right for the tax bracket you're in.


ETA: Just thought of something - you're saying your salary (gross) is only 4700 for 6 months, so you make less than 10K a year? Is that your only income? If so, then you absolutely should adjust down because if you make less than 12K I believe as Head of Household, you dont even need to file a return in MD. You would only file to get monies back.

[Pandora]

http://www.moneychimp.com/features/tax_brackets.htm

Here - use this Remember also that you have to include state taxes - which for MD is 4.75% I believe

[Panacea]

NO! So sorry, my mistake.....MONTHLY I averaged 4700 when dividing 6 months of gross!

[Pandora]

WHEW! Okay - then yes.. you're in the right tax bracket given you are taking 2 exemptions

[Panacea]

Whew is right! I'd be surrending the cardboard box on the corner we'd been living on if that was the case!!!!

Thanks for all your help! But it does look like the trustee may go for my tax return this year. Though, exemptions in MD include a wild card of 6000.00 cash, and 5000 real or personal property. It says something about earned but unpaid wages too, but no to clear on that. Or the wild card meaning. Or any of this BK stuff for that matter!!!!!!!!!!

[Pandora]

Ouch - MD only allows $1K for household goods

the "wages earned but not yet paid" means, for example, you would include all of the wages you've earned as of December 31 as an hourly employee, but will not be paid until the following pay day, sometime in January.

ETA: wildcard is for things you need / want to exempt after all other allowances are used up. So lets say your car is paid for and its worth $5000 - but you only get $2K for exemption, that leaves 3K open that you'll have to pay the trustee in order to keep the car. If you've still got your wildcard exemption, you can take the 3K out of that, exempting the entire vehicle.

You may also be able to do that with your taxes provided you have enough to cover everything else. I dont see where MD allows for vehicle exemptions.

[Pandora]

crap... did you see this?

"In general you can keep up to $12,000 in exemptions per debtor in MD - double for married...First of all, Maryland allows you to exempt $1,000 in personal property. This might include items such as: appliances, furnishings, household goods, books, pets and clothing.

Secondly, Maryland allows you to exempt $5,000 in tools of the trade. This includes clothing, books, tools, instruments and appliances to continue your business.

Thirdly, Maryland allows you a "wild card" exemption of $6,000 of cash or property of any kind and $5,000 of real or personal property. You must choose between the $6,000 exemption or the $5,000 exemption, you may not take both. "

[Panacea]

Great - it reads as if you can take both when I just pull up MD exemptions...I had to look for that "choosing" part.

[Pandora]

Yeah I didnt see it either - until I read through carefully Man, MD is hard for a BK filer!

[Panacea]

This is misleading then...

Maryland Courts and Judicial Proceedings Section 11-504

(b) The following items are exempt from execution on a judgment:

(5) Cash or property of any kind equivalent in value to $6,000 is exempt, if within 30 days from the date of the attachment or the levy by the sheriff, the debtor elects to exempt cash or selected items of property in an amount not to exceed a cumulative value of $6,000.

(f) In addition to the exemptions provided in subsection (b) of this section, and in other statutes of this State, in any proceeding under Title 11 of the United States Code, entitled "Bankruptcy", any individual debtor domiciled in this State may exempt the debtor's aggregate interest, not to exceed $5,000 in value, in real property or personal property.

[Pandora]

yeah I saw that... then started reading other areas that listed exemptions and saw where it noted you could only claim 12K as a single filer: 1K in household, 5K in tools of trade, 6K in wildcard = 12K Maybe if you dont claim tools of trade you get to claim the other 5K instead?

[Panacea]

Well, I really have no tools of my trade. I work from home. My company pays for everything, computers etc. Though, I do have an awful lot of sweat pants!!!!!