What happens to my 2022 tax refund if I file bankruptcy in 2023?
You lose it, until you spend it first. If you happen to look under, there’s a pretty complete listing exhibiting how one can spend these refund monies.
(No, you may’t reserve it. No, it’s not protected authorities assist cash to you. You need to eliminate it earlier than submitting chapter!!!).
Every year, I replace this publish. Final 12 months, we had pandemic tax refund monies that modified the calculation. This isn’t the case in 2023.
Right here is final 12 months’s publish: What occurs to my 2021 tax refund if I file chapter in 2022?
Some states offers you an exemption to guard your tax refund monies. Utah just isn’t one in all them. In actual fact, in most states, you must use it or lose it. If you happen to’re not sure, name a bk lawyer in your state and discover out.
I’ve written just a few articles on this, and the hyperlinks are under.
While you file chapter, it’s the bk trustee’s job to find property that you’ve got. Particularly, he desires to search out property that may be bought off and used to pay your collectors. Usually, the trustee will take a look at fairness in your house, cash in your checking account, the worth of you automotive, and any tax refund monies that you’ve got NOT obtained but.
Which means that you must obtain and spend your tax refund earlier than you file chapter, or there’s a good likelihood that the bk trustee will intercept it and use it to pay your collectors.
Right here, I’ll attempt to provide you with a fast and soiled listing of the do’s and don’ts of spending your tax refund monies.
- repay Mother and Dad earlier than you file bk
- purchase a brand new toy, like a dirtbike
- disguise the cash and declare that you simply spent it
- purchase jewellery
- prepay lease
- purchase meals storage and clothes
- purchase boring family home equipment like washer/dryer/fridge/freezer/range/stitching machine
- purchase weapons (actually) (I can defend as much as 3 of any worth)
- pay for automobile repairs and tires
- pay your lawyer on your chapter
Pandemic stimulus tax funds and tax credit.
If you happen to haven’t obtained these but, don’t fear. These are exempt from collectors, together with the chapter trustee.
Listed here are the outdated weblog articles:
Spend it earlier than you go bankrupt!
Utah has NO exemptions to guard your tax refund once you file chapter. Which means that when you go bankrupt earlier than you obtain and spend your tax refund, you’ll lose it. The chapter 7 trustee will take your refund and use it to pay your collectors. Alternatively, when you wait just a bit bit to file and obtain your refund, you may spend all of it earlier than submitting chapter.
Simply bear in mind to spend it on exempt objects.
You’ll be able to positively use it to pay your chapter lawyer to organize your case.
Don’t repay mates or household! Name me when you have any questions on the right way to spend it. You’ll be able to even textual content me on a Saturday at midday as you’re standing in an RC Willey making an attempt to determine if you should buy the brand new $800 bunk mattress set for the twins (sure, you may). You’ll be able to textual content me at 801-787-8860.
The listing is under, however you’re at all times secure with meals storage, clothes, washer, dryer, fridge, freezer, range.
Here’s a rehash of my publish on this identical situation final 12 months (and the 12 months earlier than):
What occurs to my 2018 tax refund if I file chapter in 2019?
What occurs to my 2017 tax refund if I file chapter in 2018?
What occurs to my 2016 tax refund after I file chapter?
It’s that point of 12 months once more the place I’ve to reply the telephone and inform those who I don’t need their cash till February or later due to tax refund season. It makes a lean December/January in our family, nevertheless it’s the one strategy to defend my shoppers.
(I’m chopping and pasting from earlier posts, so please forgive the repeat data).
So let’s say you get your refund February 1, 2016. What do you do?
Higher mentioned, what don’t you do:
1. Don’t go purchase a brand new toy like a dust bike or a television.
2. Don’t repay any mates or household. It is a preferential switch, to an insider no much less, and it leads to Mother and Dad being sued by the trustee.
So what do you do:
1. Spend it on exempt objects below Utah Regulation. This principally means meals, clothes, washer, dryer, fridge, freezer, range.
(Did you see a pc on the listing? No. Don’t ask me if that’s okay. It’s not).
2. And use the remaining to pay me.
So let’s say you spend the tax refund on meals storage March 1st and maintain your entire receipts. When are you able to file? March 2nd.
Here’s a related portion of the
Utah Exemptions Act, Utah Code Title 78B Chapter 5, Part 505https://le.utah.gov/xcode/Title78B/Chapter5/78B-5-S505.html
A person is entitlted to an exemption in …
(viii) (A) one:
(I) garments washer and dryer;
(V) microwave oven; and
(VI) stitching machine;
(B) all carpets in use;
(C) provisions adequate for 12 months really supplied for particular person or household use;
(D) all sporting attire of each particular person and dependent, not together with jewellery or furs; and
(E) all beds and bedding for each particular person or dependent;
There are different objects you may spend the cash on, and that is in no way complete, however this could provide you with a good suggestion on the right way to spend it. You probably have questions on what to make use of it for, ask your lawyer; that’s what he’s there for.