During the course of your bankruptcy, the issue of your tax refund may arise. Everyone wants to keep their refund, especially if the amount is considerable. However, the trustee assigned to your case may request that you turn over your refund. Whether you can keep your refund depends on several factors that you should discuss with your attorney. Any payable, but not yet received, income (including tax refunds) is considered part of your 'Bankruptcy Estate'. Your refund may be part of your estate if it is sitting in a bank account, unspent.
Fort Lauderdale Bankruptcy Lawyer, Bankruptcy Lawyer Tampa, Attorney Bankruptcy,
The point that you need to recognize is this; depending on a) local custom, b) the trustee appointed to your case, c) whether the refund can be exempted or not, and d) whether the size of the refund involved is worth the trustee's effort, bankruptcy filers can, and regularly do, have to surrender some or all of their income tax returns.
One factor that will be considered by the trustee is the size of your refund. The trustee may view those funds as money to be used to satisfy some or all of your creditors' claims. If your refund is smaller-perhaps in the $500 range-it probably will not be worth the trustee's time take that refund, because distributing those funds to each of your creditors would be more expensive than the amount of the refund.
Depending on your specific circumstances and whether you are looking to file in the future or have already filed for Chapter 7, or Chapter 13 bankruptcy, you may not be able to hold onto your tax refund even if you received it before filing. However, there are always exceptions to the rule.
A Few Exceptions
Some of these exceptions will indicate that all refunds should become part of the bankruptcy estate. In many cases, filers are allowed to keep a portion of their refund. How much a person can keep depends on numerous factors which include whether any exceptions or exemptions apply and when the bankruptcy was filed.
A way of calculating the portion of the refund that is due to the trustee is this: Generally, the part of a tax refund that belongs to the bankruptcy estate is the part that was accrued before the date of filing, in proportion to the entire refund. For example, if someone files for bankruptcy on December 30, the bankruptcy estate includes 364/365ths of the income tax refund due for that year, and if someone files on February 1, 2013, the entire yet-to-be-received refund for 2012 year can be considered part of the bankruptcy estate, as well as 1/12 of the refund for the 2013 year.
If you receive your tax refund before you file bankruptcy and then spend it wisely (keep the receipts - the trustee may ask for them!) then you will have averted the problem.
Best Ways to Keep Your Refund
Spending your refund to cover your rent, mortgage, car payment, or your bankruptcy attorney fee is probably the safest way to use your tax refund.
Another course of action for filers is to avoid the problem altogether by simply correcting your W-4 withholdings for the year so that little or no refund will be due.
Since every case is different, you should never make any assumptions about whether or not you will be able to keep your refund. This is true whether you have filed or plan to file for bankruptcy in the near future. Whether you have already filed or are planning to file in the future, you should consider the benefits of discussing your case with your lawyer ahead of time.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Court
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment