It’s tax time – again. \u00a0For many, including myself, it can be a time of fear and loathing. \u00a0Given a choice between having a colonoscopy or going to see my accountant to prepare my annual taxes, I would probably choose the former. \u00a0I’m relieved to be able to say that mine are done and filed. \u00a0So glad to have that over with. \u00a0Since I’m self employed, I almost always have to pay in.<\/p>\n
For my Chapter 13 clients tax time has another layer of complexity, trickiness might be a better word. \u00a0Most Chapter 13 plans in Minnesota are required to have a provision that says the Debtors are to provide copies of all annual state and federal income tax returns to the Trustee’s office as soon as the returns are filed. \u00a0If they are to receive a refund, the provision usually allows married debtors filing jointly to keep the first $2,000 of the refunds, and allows individual filers to keep the first $1,200 of the refunds. \u00a0After those allowances, the balance of the refunds is to be paid into the Chapter 13 Plan as an additional contribution. \u00a0This contribution benefits the creditors, but usually has no particular effect on the monthly payment plan for the Debtors. \u00a0After making this extra contribution, in most cases the monthly payments under the Plan continue unchanged and on the same schedule.<\/p>\n
The preferred method of sending the tax returns to the Trustee is now to make the return into a PDF and email it to an email address that the Trustee’s office has designated for that purpose. \u00a0After that the Debtors should wait for a letter from the Trustee’s office which will tell them how much of the refund should be mailed in. \u00a0The letter is usually sent promptly, although it comes by snail mail. \u00a0Since I tend to be copied with both the emails and the snail mail, I have had quite of bit of this correspondence arriving on my desk over the past few days. \u00a0So far this year there has been only one case where I disagreed with the way the Trustee’s office was calculating how much my clients were to send in. \u00a0When that happens, I have always been able to straighten things out with a of series of email exchanges with the staff person who did the calculations.<\/p>\n