Income Tax Refund

[AreSoonParted]

I was thinking of filing a bk sometime in August/September. I would fall under the means test so I was just "happily" preparing for the inevitable. I was surprised last week to get a large bonus from my employer, so now my means test is blown to bits. I need to wait until January for the money to "roll out" of the 6 month window used for means testing... Anyway, Does anyone know what will happen to my Federal Tax that's owed to me if I file in January?? Because of this bonus, I'm going to get a good chunk back and I hate to just have that part of the bk estate. I was thinking of doing my taxes AFTER discharge, but I'm sure somewhere along the line they will look at my paystub.

Unfortunately the bonus is a one time deal.
Any suggestions?

Thanks

[FilingOnMyOwn]

Afraid thats part of the deal, my friend. You file bk, and whatever assets you have become a part of the estate. Maybe they'll ask for the return, maybe they won't.

[AreSoonParted]

Thanks. I sort of thought so. I think I'm going to be doing a bunch of cash flow analysis to see if I can keep my head above water long enough and delay filing to get and use that money. Kind of funny how getting "Free Money" can sometimes complicate things.

[SinkingFast]

Typically, Trustees are very interested in tax refunds during tax time and with people who file later in the year.

One way to approach the situation is,........ File your taxes first before you file BK. Get the refund back and spend it on necessities. Be sure to save receipts to show where the money went. Then file BK. Your BK Estate is set the day you file. If the money has come and gone before you file, it's technically not property of the BK estate.

But, be prepared that the Trustee may ask for a portion, if not all of your refund anyway. The Trustee can always put you in a tight spot by requiring you fork over the funds. If he/she doesn't get any refund money next spring from you, that may be a condition of your Discharge. Money from your '07 income tax refund.

It's a dangerous, tricky thing to do. Get your refund, spend it, then file. Especially during tax time in the spring.

[SinkingFast]

Thanks. I sort of thought so. I think I'm going to be doing a bunch of cash flow analysis to see if I can keep my head above water long enough and delay filing to get and use that money. Kind of funny how getting "Free Money" can sometimes complicate things.

Adjust your with holdings now, for the rest of the year. Pay next to nothing in taxes out of your paychecks to account for the huge mandatory deduction taken from the bonus.

Then you'll have more money to live on month to month now, and less of a refund to worry about next spring.

[pink_amulet]

I was thinking of filing a bk sometime in August/September. I would fall under the means test so I was just "happily" preparing for the inevitable. I was surprised last week to get a large bonus from my employer, so now my means test is blown to bits. I need to wait until January for the money to "roll out" of the 6 month window used for means testing... Anyway, Does anyone know what will happen to my Federal Tax that's owed to me if I file in January?? Because of this bonus, I'm going to get a good chunk back and I hate to just have that part of the bk estate. I was thinking of doing my taxes AFTER discharge, but I'm sure somewhere along the line they will look at my paystub.

Unfortunately the bonus is a one time deal.
Any suggestions?

Thanks

Few things we noticed... We filed on Sept 05.
~ The trustee didnt ask or even see pay stubs....(we were well under anyways.)
~ The trustee can take a % of your refund.....but from what was said LAST year (old laws)...since we filed in Sept (9th month), they could take 9/12th of our refund....However they didnt touch it at all, and we got a $5500 refund.
It really depends on how your trustee is. Also in our case my hubby worked over time, but it was only over the summer, and he normally never gets it so the lawyer worked the numbers to reflect that.

Good luck.

[anonymuse]

Re do your exemptions so that you get as little back as you can!!! Then you can use that money you are getting now to prepare for bk. Need to save for a lawyer? Filing fees? etc.

[bkadv]

Most definitely adjust those withholdings. Something we failed to do, and got our return taken. The good news is that I've heard of few others who got their returns taken. Once your case becomes an asset case it will delay the closing which in turn seems to complicate other matters. You are much better off to try and avoid becoming an asset case.