|
Well, now that New Year's Eve is past, it is almost tax season. We
are bound to get some questions about tax refunds and bankruptcy. The
short answer to question "can they take my tax refund?" is of course:
YES. Your tax refund is one of your assets: it is basically whatever
is left over after you pay your 2003 tax liability out of the money
you paid into your tax withholding account during calendar year 2003.
(I am ignoring earned income credit and other tax credits...)
This raises a question which I would love to see answered. What
happens if you try to take money out of your bankruptcy estate by
having too much withholding taken out of your paycheck (or simply by
making excessive estimated tax payments)? In theory you could make
excessive advanced tax payments, declare bankruptcy and then get a tax
refund the next spring. But there must be some reasons why this plan
could backfire. Like, perhaps the bankruptcy trustee will see that
the tax payments shown on your financial documentation (e.g., the
withholding shown on your paystubs) would be suspiciously high
compared to payments made by other filers with similar income levels.
But are there other ways this could backfire (e.g, could the trustee
look at your IRS withholding data)?
|
| |
| |
|
