Does 2009 Federal Tax Refund count as income in 2010 on Form 7 item 2?

[Lalalink]

Does our 2009 Federal Tax Refund count as income in 2010 on Form 7 item "2. Income other than from employment or operation of business?" If it matters, the amount is less than $200.

We are filing pro-se, and my guess is it does NOT count as income at all. My logic? I looked at our Tax Form 1040A and realized it does not count as income on our 2010 return, so why would it count as income on BK Form 7 item 2.

Thanks for any info,
Lala

[daylate]

I think it depends on your district.

[ValleYum]

2. Income Other than from Employment or Operation of Business
All other income, other than from employment, trade, or profession, or from operation of
the debtor's business, that the debtor received during the two years before the commencement of
the case should be disclosed under item 2. This category may include, but is not limited to,
income from tax refunds, Social Security and other public benefit payments, alimony, child
support, interest, dividends, pensions, annuities, capital gains, money judgments from lawsuits,
royalties, licenses, rents, leases, and subleases. The amount and source of the income should be
listed in the space provided. Spouses that have filed a joint petition should list the income for
each spouse separately. Married chapter 12 and 13 debtors must list the income for each spouse
whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not
filed.

http://www.mdb.uscourts.gov/pdf/forms/b7/b7-inst.pdf

[Dorsey]

When completing my forms I played it on the safe side and included income tax refunds on Form 6 (Schedule I) and Form 7 ... even though the inclusion of such income is only required by the instructions to Form 7. Under Form 22A, however, such tax refunds are not to be included as part of "other income." There is a document entitled "STATEMENT OF THE U.S. TRUSTEE PROGRAM’S POSITION ON LEGAL ISSUES ARISING UNDER THE CHAPTER 7 MEANS TEST." This document gives directions on completing Form 22A and specifically instructs a debtor NOT to include tax refunds as part of income. Which is interesting because it causes the forms to be inconsistent with one another since Form 7 requires the use of tax refunds in the definition of income, but Form 22A does not.

[Dorsey]

[deleted by Dorsey]

[Lalalink]

The key word on the instructions for B7 for line 2 that caused me pause was "may include." I just found IRS Publication 17 which states which tax refunds should be included in income as far as the Federal Tax Return is concerned:

"Federal income tax refund. Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income.

State tax refund. If you received a state or local income tax refund (or credit or offset) in 2010, you generally must include it in income if you deducted the tax in an earlier year. The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2011. The IRS also will receive a copy of the Form 1099-G. If you file Form 1040, use the State and Local Income Tax Refund worksheet in the 2010 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. See Publication 525 for when you must use another worksheet. "

Since we lived in FL in 2009, we did not receive a state tax refund, just a federal refund, thus why we did not have (or report) "other income" on line 10 of our 2010 Federal Tax Return. I think like Dorsey posted, just to be on the safe side I'm going to report the federal refund anyway on form B7, line 2, eventhough I think my recent research indicates that federal tax refunds are not considered income. However, in states where you receive state and local tax refunds, you would include on form B7, line 2; in these states you would also have received a form 1099-G (a copy of which is also sent to the IRS).

Since my husband is filing a Chapter 7, non-consumer, no asset case, it really won't hurt us just to include it in his filing.

So, I must have been posting when also thinking of the possible Chapter 13 that I may have to file later in the year. As I don't want income that is not really considered income to go towards a repayment plan. But then again, it is still relatively small and would add about $10 to a monthly repayment plan. I guess I will make my decision on this issue at that time, if no one else has a definitive answer by then.

Thank you all for your time so far on this post. I really appreciate your thoughts! (I included references after my signature.)

Lala

Publication 17, Ch.12 (Other Income) (I googled the following: what tax refunds are to be included in 1040)
Six Facts about IRS Publication 17 (I googled the following: publication 17 (2010)

(sorry, haven't met my minimum of 15 posts yet, so I could not do a hyperlink to the referenced sites; you'll have to google for now)

[LadyInTheRed]

Whether the refund is considered income on your federal or state tax return is a different issue from whether it is included as income on your bankruptcy petition.

I think the word "may" is in the instructions because not everybody will have all of the income sources listed.

[Dorsey]

I think the word "may" is in the instructions because not everybody will have all of the income sources listed.

LadyInTheRed, I think that's exactly right. The word "may" is not purporting to suggest you have the option to include a refund, but rather that you may or may not have a refund to disclose.

[Lalalink]

So, I must have been posting when also thinking of the possible Chapter 13 that I may have to file later in the year. As I don't want income that is not really considered income to go towards a repayment plan. But then again, it is still relatively small and would add about $10 to a monthly repayment plan. I guess I will make my decision on this issue at that time, if no one else has a definitive answer by then.

Lala

I've got so many things floating around in my head that I'm trying to sort them out. I don't even know why I cared about Form B7, line 2; as my question will not affect my 22A or Schedule I for a 2011 BK filing, as the refund was received (and spent) last year. Ugh... hate it when I major on the minors! I will list the 2009 Federal Refund as income for 2010 on line "2. Income Other than from Employment or the Operation of Business."

As an aside to possible a new thread (we just received tax refunds for our 2010 IRS filing), which brings up another thing I need to figure out. How/where do I need to report the two refunds we just received from our extended 2010 income tax filing. For my husband's non-consumer/no asset/ Ch. 7 I'll need to revisit Schedule I (and of course report them on the Statement of Financial Affairs as 2011 income). And for my Ch. 13, I'll need to revisit 22C, Schedule I and the B7.

I'll address this in a new thread if I need to.

Again, thank you so much for all replies. It helps so much to bounce thoughts back and forth from such a great group of people.

Lala

[Lalalink]

I think the word "may" is in the instructions because not everybody will have all of the income sources listed.

LadyInTheRed, I think that's exactly right. The word "may" is not purporting to suggest you have the option to include a refund, but rather that you may or may not have a refund to disclose.

Thank you both for clearing up the language. I don't know why it wasn't so clear to me before; and sadly, I needed BOTH of your replies to get me to understand it, lol!

Lala