Question in regards to filing after tax season >

[mesa777]

If I decide to file for a chapter 7 or 13 BK in June/July and get back in Feb 08 a tax return of around $3500 will I be in for a payback to the court of some sort?? Can I use this money from my tax return to use to file my bankruptcy? I am very worried about what to do in regards to my tax return.

[BKcrazy]

You can't spend it on anything fun. You could use it for bills, attorney fees, car repairs, etc. Keep that in mind and keep receipts for what you do spend it on.

[mesa777]

So if I use the money for my attorney fees, car payments, food, etc, I should be ok?? I understand of course that I am not going to use this money for a Mexio vacation...

[rissyroo]

My husband and I got about a $3000 tax refund this year and I individually filed Ch. 7 this past July 2. We had to include the refund amount in the means test because it's considered income. We didn't have to hand any of it over though.

[BKcrazy]

So if I use the money for my attorney fees, car payments, food, etc, I should be ok?? I understand of course that I am not going to use this money for a Mexio vacation...

Yes. I thought I was going to be in that situation, I filed my 2006 taxes late....And I owed....Good thing about being in BK, they hold your account, and only pay if you want until BK is closed...Erm right...

But, my attorney said should I get a return, no fun stuff whatsoever.

(Wow, I'm guru status now? I'm far from a guru haha, black sheep is more right.)

[lrprn]

My husband and I got about a $3000 tax refund this year and I individually filed Ch. 7 this past July 2. We had to include the refund amount in the means test because it's considered income. We didn't have to hand any of it over though.

Your tax refund should not be counted as income because you are just getting back money you earned in your gross salary but "loaned" the government for the year when you overpaid your taxes.

Who told you your tax return had to be counted as income when you filed?

[BKcrazy]

I would run that past an attorney....That's not something to mess with when you are dealing with thousands as opposed to a few hundred. I had miscalculated and thought I was getting about $2-3k back. My attorney said if you get back a lot, do not spend it on anything fun.

[AtWitsEnd]

Your tax refund should not be counted as income because you are just getting back money you earned in your gross salary but "loaned" the government for the year when you overpaid your taxes.

Who told you your tax return had to be counted as income when you filed?

When the paralegal filled out our papers to file, which we are going to do in Feb or March, she also took our last years tax return which was 2200.00 and divided it by 12 and added that amount (192.00) to our monthly income. She said if we raised our exemptions,and took less refund, it would be extra income for us and she had to include it.

[mesa777]

So.. is this added as INCOME on the so called "means" test??? I understand that I cannot go on a $3K vacation to London however can pay bills, attorneys fees, buy food, make car payments... ect.... Is that correct????

[lrprn]

So.. is this added as INCOME on the so called "means" test??? ... Is that correct????

Income tax refunds are NOT new income and are NOT added as income on the Means Test. All you are doing is getting back money from your gross income where you overpaid taxes. Counting a tax refund as income would be counting the same earned income twice.

Unfortunately the paralegal in rissyroo's case made a mistake. Their refund should not have been counted as new income when they filed.

[BKcrazy]

I'm not trying to start anything, but even overpaying your taxes....

Still money coming in. Go with what your attorney says.

[mysterie91]

I'm not trying to start anything, but even overpaying your taxes....

Still money coming in. Go with what your attorney says.

My attorney also has a line for tax returns. As PP said - some trustees and courts consider this as money in and a source of funds that could be used to pay creditors. ANY money you take in is considered income and included according to our district.

[keepmine]

My attorney also has a line for tax returns. As PP said - some trustees and courts consider this as money in and a source of funds that could be used to pay creditors. ANY money you take in is considered income and included according to our district.

This is not the same as income for means test purposes.
Yes, a refund due but not received can be seized in many districts. That's why we advise spending any refund before you file.