Keeping Your Tax Refund When Filing Bankruptcy
Benjamin Franklin is attributed with the saying that nothing is certain except death and taxes. And while little can be done about the certainty of death, I can help you maximize the money that stays in your pocket by utilizing your tax refund exemptions when you file for bankruptcy.
On the date you file for bankruptcy, all of the assets that you own become part of your “bankruptcy estate.” Debtors are able to protect property that they own up to a certain dollar value. If the debtor is owed a large tax refund, this refund is something a trustee will usually try to take for the benefit of the unsecured creditors. However, with a little planning, I can help you keep most, if not all, of this money by properly applying your tax refund exemptions.
How Does It Work?
In Ohio refunds that contain credits attributed to the Earned Income Credit or the Additional Child Tax Credit are the debtors to keep up to the credit value. You can also apply your Cash exemption ($450.00 for an individual debtor in Ohio) and/or your Wildcard exemption ($1,225.00 for an individual debtor in Ohio) towards your tax refund. Any other portion of the refund is subject to being turned over to the trustee. Your bankruptcy exemptions can even be applied to a refund you have NOT received at the time of filing your bankruptcy case.
It is important to know what property is exempt and what property you are at risk of losing when filing your bankruptcy case. Utilizing the tax refund exemptions is imperative to help you move forward with a life without debt!