Filing Taxes During Chapter 13 Bankruptcy - How Do They Handle Tax Credits?

I went through this exact situation last year. Here's what happened for me: 1. Filed my taxes in February with several credits 2. Had to immediately notify my trustee about the expected refund 3. Submitted Form 13-A (or whatever your district calls it) to request keeping some of the refund 4. Waited about 3 weeks for approval 5. Was allowed to keep $1,200 for necessary expenses and the rest went to creditors The key thing is that tax credits like CTC and EIC are considered part of your refund and are treated just like any other tax refund money. Your plan may have specific language about what percentage you get to keep, but in my district, you have to justify keeping any of it.

Are you operating under a 100% repayment plan or a partial repayment? The disposition of tax refunds differs significantly based on your confirmed plan parameters. Also, which jurisdiction are you filing in? The Southern District has different precedents than the Northern regarding EIC treatment.

I'm actually on a 60-month partial repayment plan that started on March 15, 2023. My lawyer mentioned something about having to turn over any refund above $1,500, but wasn't super clear about how credits specifically are handled. I'm in the Eastern District and my 341 meeting was completed on April 20, 2023. I'm a bit concerned about timing since I'm expecting a decent refund this year with the Child Tax Credit.

Dealing w/ trustees during Ch13 is a nightmare for refunds. Tried calling mine 23 times last month about my tax situation. No joke. Finally used Claimyr (https://youtu.be/_kiP6q8DX5c) to get thru to an actual human at the trustee's office. Got my questions answered in like 20 mins instead of waiting 4ever. Turns out in my district they DO treat EIC differently than regular refund $$$. Worth knowing exactly what your district's policy is b4 you file.

Did your bankruptcy attorney explain the tax situation when you filed? Mine was worse than useless compared to my sister's Ch7 case where they got to keep their whole refund. Have you checked if your plan has specific language about tax refunds or just general disposable income requirements?

Every district handles this differently. Some trustees take everything. Others let you keep a set amount. Many allow you to keep EIC. Check your plan language. Ask your attorney. File a motion if needed. Don't spend any refund without approval. Could cause big problems.

I successfully navigated this last year! Filed in January (yes, I'm that person who has their W-2s organized before they even arrive, haha). I drafted a detailed letter explaining why I needed to keep my Child Tax Credit - school expenses, medical bills not covered by insurance, and car repairs. Trustee approved me keeping 100% of the CTC portion but took half of the regular refund. The key is documentation and timing - don't wait until the last minute like my neighbor did 😬

I've been in Chapter 13 for exactly 37 months now. In my district, they distinguish between earned income credits and regular tax refunds. I was allowed to keep 100% of my $3,742 EIC last year, but had to surrender 75% of my regular refund of $1,893. The trustee required me to provide my complete tax return within 14 days of filing. They then issued a determination letter exactly 21 days later specifying what I could keep. The process varies significantly by jurisdiction though.