I need my tax refund

[moneyblues]

I am going to file chapter 7 but I also want to file my 2010 taxes so I can secure a place to live. Should I file get my refund and spend it and then file or would it matter. I have lost everything and need this to get somewhere for me and my kids. Would this get me into trouble for getting and spending and then filing? I have to file too much debt and no income.

[free2breathe]

Absolutely fine to file your tax return, get your refund, and spend it on living expenses.

[Freddy03]

My attorney told me it would be ok to file ch 7 after I have received and spent my tax return on living expenses.

[djd]

Yes, your refund may be used for living expenses. No need to worry.

[justbroke]

The only concern I would have, is whether Trustees in your area consider "deposits" to be property of the Estate. You should make sure you use an exemption scheme which covers deposits, or make sure your deposit is covered under a wildcard. Others on this board have had the Trustee (in the 11th Circuit -- Georgia, Florida, Alabama) want the value of the deposit paid into the Estate!

[moneyblues]

Okay I will look into what my deposits would be classified as, but if I don't have a job then will they make me totally destitute like that? That would everything I have.

[justbroke]

Yes, some Trustees would. However, they will generally give you terms to repay it... like over 12 months.

[moneyblues]

Well... just in case, I'll spend it before I file.

[justbroke]

You will be asked how you spent it, so I'd make certain that it was on necessities and not luxuries.

[moneyblues]

It will definitely be living expenses. Maybe next year a luxury. I have dreams. lol

[MrSmithster]

FYI, At my 341, TT was VERY interested in tax refunds, especially ones that where cashed within a few months before filing and with amounts over $1k. From what I gathered, he was going after quite a few filers refunds, all seemed to be Chapter 7's. A few posts on this site complain of the TT making them pay back tax refunds received AFTER filing and BEFORE 341, even though I don't believe its legit, I probably wouldn't argue the point. And most that had this done didnt have to pay the whole amount back, usually approx 40-50%, and usually over a 6 month to year period.

[justbroke]

A few posts on this site complain of the TT making them pay back tax refunds received AFTER filing and BEFORE 341, even though I don't believe its legit, I probably wouldn't argue the point.

This is 100% legitimate. The Bankruptcy Estate consists of everything that is yours before filing. That you received payment of the actual refund after filing, is immaterial.

The fact is that it was a payment due you at the time that you filed. It's no different than having $$$ in the bank before filing. An IRS overpayment (that is subsequently refunded) is just like having money in the bank, and is subject to distribution by the Trustee. Smart attorneys -- and pro se debtors -- do their best at exempting any "anticipated" refund.

[RichM]

I would suggest tweaking your W-4 form so you break even or owe taxes at the end of the year.

-Rich

[Snuff]

Smart attorneys -- and pro se debtors -- do their best at exempting any "anticipated" refund

I or shall I say we, as we are filing jointly (IRS and BK), expect a refund of around 3K. Here we can exempt this amount as each one of us can exempt $1,820. How should this be worded or presented when filed? Also I'm assuming the refund can be divided between us since we are filing jointly. (?)

[justbroke]

I or shall I say we, as we are filing jointly (IRS and BK), expect a refund of around 3K. Here we can exempt this amount as each one of us can exempt $1,820. How should this be worded or presented when filed? Also I'm assuming the refund can be divided between us since we are filing jointly. (?)

First, let me say that I'm not intimately familiar with Alaska bankruptcy exemption scheme. However, there is no wildcard, and I don't see how you can exempt an anticipated refund in Alaska. Unless you're able to use the Federal Exemptions.

If you're filing pro se be warned that it doesn't look good in Alaska.

So, I did a quick 2 minute look and found that caselaw suggest that an anticipated refund cannot be exempted. I looked at In Re Henrickson, where the U.S. "Supreme Court found that tax refunds were property of the bankruptcy estate and not subject to exemption as wages under the Consumer Credit Protection Act." (Kokoszka v. Belford 417 U. S. 642 (1974).

Also, the judge in that case, ended the opinion with "reviewed the categories listed in A.S. 09.38.030(e) with regard to income tax refunds. I conclude that the debtor’s income tax refund does not qualify for exemption under any of the five subdivisions of (e)".

You should consult a few attorneys in Alaska to see if that 2007 ruling still holds.

(I want to add that I personally won't specify which statute to use to exempt anything on the Forum because this is a property issue and I would never want someone to lose property because I told them to list XXX.XX(z) on their forms!)