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    Question about Income

    I am looking for more specific information on income for the previous six months. Is this income supposed to be based on when the paycheck/bonus check was written or when it was received? Specifically, if I get a large bonus that was written the last few days of the last calendar month counting toward my six month income, but the company does not mail it until after the 1st of the next month, is that required to be included based on the check date even though I might no get it for a week or two into the new month?

    #2
    For tax purposes individuals are cash basis taxpayers meaning its counted as income when you receive it. That's when it shows on your pay stub(and w-2 earnings) and goes into your bank account. Since you have to show last six months pay stubs I'm 99.99% sure it is counted when you receive it. So if you file May 1, on the means test you'd include Nov-April paychecks received. Hope this scenario works in your favor. Good luck.

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      #3
      Daylate is correct, however, how it is calculated for tax purposes is not the reason. By definition, "currrent monthly income" is "the average monthly income from all sources that the debtor receives. . . without regard to whether such income is taxable income, derived during the 6 month period. . ." 11 USC 101(10A)(A).

      If you have not received it, it is not "income" under the definition.

      Des.

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        #4
        How about income tax refund. Does income tax refund consider as an income when filling for BK. Although it is not a payroll check.
        Thank you in advance.

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          #5
          Originally posted by chiwawa View Post
          How about income tax refund. Does income tax refund consider as an income when filling for BK. Although it is not a payroll check.
          Not in my jurisdiction but I am not in Ca.

          Des.

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            #6
            I would have thought a tax refund was not but I believe in some districts it is considered as such. Do some searches on the forum I'm sure there is some stuff about this topic.

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              #7
              Many Trustees treat tax refunds like income that has been realized over the entire calendar year; therefore the refund is generally treated as part of the BK estate based on your BK filing date, rather than when you receive it. In other words, I have seen many Trustees ask for 75% of your CURRENT tax year refund if you file in October. Most PAST year refunds (in this case, a 2010 tax year refund you receive in, say, April 2011) is included as income in the 6 month calculation, but is exempt from the Trustee if it is spent on allowable expenses.

              This I know - I was tagged for 60% of my 2010 tax refund the other day, after a November 2010 discharge. Even though we had NO witholding in tax year 2010, we had a big and unexpected tax credit refund from a child adoption from 3 years ago (the credit suddenly became a refund due to a tax law change). Boon to bummer in a few days time.

              Any other income will generally be realized when it is RECEIVED. That is to say that the issue date of the check is typically the date used. This is so you are not tempted to hold a bonus check for a few months until after your 341 or discharge. In fact, a standard question a Trustee will ask at the 341 pertains to this exact scenario.

              Also - the 6 month income calculation is a guideline for the Trustee, and not an absolute. A Trustee can and will flush a BK for "totality of circumstances" if he/she feels you are playing games with dates and trying to throw one past them.

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