Now that tax refund time is upon us again, it is time for a refresher on what to anticipate regarding your tax refunds when you file bankruptcy.
First, tax refunds are part of your bankruptcy estate. This means that if you are entitled to any tax refunds or have already received your refunds then those are considered assets for your bankruptcy.
Second, you would be able to keep whatever portion of your tax refunds you are able to exempt. Exemptions are different for Missouri and Kansas, so you’ll need to speak with a bankruptcy attorney about what and how much you’ll be able to exempt.
Third, if you are not able to fully exempt your tax refunds then you can (1) receive and spend down the refunds before you file for bankruptcy (living expenses and to pay for the bankruptcy are fine, but don’t give any money to anyone and don’t pay back family/friends right before filing bankruptcy), or (2) turn over to the trustee the portion of your tax refunds that you are not able to exempt.
During this tax refund time, you should seek the counsel of an experienced bankruptcy attorney to help you navigate the complicated analysis of which exemptions apply in your case when you are entitled to tax refunds. Contact W M Law today for help.