Posts Tagged: ‘Tax Refund’

Coordinating the Timing of Your Bankruptcy and Tax Refund

January 25, 2018 Posted by kingcade

If you are considering filing for bankruptcy, timing can be everything. The last thing you want to do is file for bankruptcy, receive a large tax refund and have to hand it over to the bankruptcy trustee.  If you are anticipating a refund, it is important to time your Chapter 7 bankruptcy filing just right.

In a Chapter 7 bankruptcy, all assets are considered to be part of the bankruptcy estate which is controlled by the bankruptcy trustee. If the asset is tied to what is known as an exemption, the asset can be protected. Otherwise, the asset can be liquidated and used to pay off the qualifying creditors. A tax refund is one of those assets that is not tied to a bankruptcy exemption, which means that this sum of money can be used by the trustee to pay back creditors before the remaining debt is liquidated.

Any unspent tax refund the year before bankruptcy will go to the bankruptcy estate because this money is considered to be unnecessarily paid to the IRS, just like cash in a bank account. If the refund is received during the year of Chapter 7 bankruptcy, the amount of tax refund that is based on the income earned before filing for bankruptcy will go to the bankruptcy estate. If the refund is based on income earned after the date of filing, the debtor can keep this money. Any refund received for income earned the year after bankruptcy is safe.

What this means is the timing of when you file bankruptcy is key. A bankruptcy attorney can discuss these options with you. If someone is anticipating filing, that person can adjust his or her withholding on paychecks to the minimal amount so that the debtor pays only the tax that is owed. He or she can also spend the refund on what are considered to be necessary expenses. These expenses can include mortgage payments, food, utilities, medical care, education or car payments. Necessary expenses do not include purchases for luxury items, repayment of a credit card or paying back a friend or family member.

It is possible to keep your tax refund as part of an exemption. In every bankruptcy case, each debtor is allowed to exempt a certain amount of property, depending on the state. It is possible that a tax refund can be included in this exemption. A bankruptcy attorney can discuss this possibility with you, addressing the pros and cons of utilizing this option.

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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Tax Filing Tips to Speed up the Refund Process and Prevent Theft

January 23, 2018 Posted by kingcade

Income tax refund fraud has been a problem in recent years, and much of this fraud occurs when it comes to filing your taxes and waiting for the refund to be processed. The Better Business Bureau (BBB), along with the Internal Revenue Service (IRS), recommends certain tips to help taxpayers prepare and submit their paperwork quickly to ensure their tax return is protected.

Identity theft has become an issue over recent years through data breaches of many trusted tax sites. The IRS recommends tax preparers be cautious when it comes to sending information for taxes. Fake clients have been known to ask for help with tax returns by sending tax preparers infected email attachments. Once these attachments are opened, the virus has already made its way into the computer system, hacking into important client information.

Information can be protected through filing returns via a computerized e-filing system. The preparer can also have the refunds deposited directly into a bank account through a secured system to protect the refund. Not only do these systems get the job done in a more efficient manner, but they also protect the confidential information involved in the tax submission and refund.

The following tips are helpful when it comes to speeding up the refund process and preventing fraud or theft:

  • Check the credentials of the tax preparer, ensuring that the preparer is a certified public account, tax attorney or enrolled agent.
  • Get referrals for tax preparers from friends, family, the local Chamber of Commerce or the Better Business Bureau.
  • Avoid using tax preparers who promise they can produce larger refunds than their competitors.
  • Do not sign a blank tax return, even if the tax preparer states that this is solely for “convenience” purposes.
  • Carefully review the contract entered into with the tax preparer.
  • Ensure that submission of tax documents is done via a secured Internet connection and not through a public Wi-Fi hotspot.
  • Shred copies of tax returns, drafts or calculation sheets that are no longer needed.
  • If the preparer does not wish to file electronically, mail the tax return in a USPS mailbox or directly at the post office.
  • Ignore unsolicited telephone calls or emails that state they are from the IRS but do not appear to be official.
  • Respond to any communication that is official as soon as possible, or at least send the communication to your accountant or tax preparer.

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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

When a Tax Refund Means Bankruptcy

April 4, 2017 Posted by kingcade

A review of the past four years shows that Chapter 7 bankruptcy filings, the most common form for individuals, have spiked during tax season or just after tax season. This suggests that taxpayers are using their refunds to file for bankruptcy and wipe out their debt, rather than funding a vacation or splurging on a big purchase.

Filings in March were 26 to 34 percent higher than the monthly average from 2013 to 2016, according to NerdWallet. Additionally, April’s bankruptcy filings were also 15 to 25 percent higher than other months.

Filing for Chapter 7 bankruptcy costs the average consumer approximately $1,500 to discharge their debts. Attorney fees typically cost $1,200 and other court fees total approximately $335. Due to a 2005 law change that made bankruptcy filing more complicated, fees have increased in recent years.

According to the IRS, the average tax refund in 2016 was $2,860, which is enough to cover the average bankruptcy costs.

When Bankruptcy Makes Sense 

You should consider Chapter 7 bankruptcy if the following applies to you.

  • Your problem debt is greater than 50 percent of your annual income. This usually means medical bills, credit card debt or high-interest loans.
  • You see no way of paying off your debt within five years.
  • Debt is interfering with other parts of your life, such as hampering your ability to buy a car or save for retirement.

 

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

What to Consider Before Paying Christmas Bills with a Tax Refund Loan

December 26, 2016 Posted by kingcade

If you are planning on paying off your Christmas debt with your tax refund check, you may want to think again. The Internal Revenue Service (IRS) announced that some taxpayers will experience delays at the beginning of tax season in 2017 due to a new law that requires the IRS to hold refund checks until February 15th. There may also be delays due to weekends and the President’s Day holiday. As a result, the IRS cautions taxpayers not to count on their refund checks until the week of February 27th.

However, some taxpayers are planning to use tax Refund Anticipation Loans (RALs) or Refund Anticipation Checks (RACs) to tide them over between the holidays and tax season. If you are planning to do so, here are a few things to keep in mind:

  • Interest Rates: In most RAL agreements, the taxpayer agrees to repay the RAL at tax time, plus interest. Some states limit the amount of interest that a lender can charge, however, in some instances, the annual percentage rate (APR) of an RAL can exceed triple-digits.
  • Fees: In addition to high interest rates, RALs oftentimes come with hefty fees that can diminish the remainder of your refund check. According to the National Consumer Law Center, some add-on fees they observed in a 2013 report included application fees; data and document storage fees; document processing fees; e-filing fees; service bureau fees; transmission/software fees; and technology fees.
  • Uncertainty: Keep in mind that you have to repay the entire amount of the loan even if you receive less than you anticipated. This means that you have to estimate the amount you will receive back on your taxes when taking out a loan.

 

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If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Corinthian College Students Still Waiting for Financial Aid Help

October 14, 2016 Posted by kingcade

Eighteen months after Corinthian Colleges Inc. closed the doors of its remaining locations, Heald College, Wyotech and Everest University, tens of thousands of former students are still waiting to receive some form of relief from the student loan debt they incurred to attend the defunct college.

Nearly 80,000 CCI students are facing debt collection related to the loans they took out to attend the schools. Although the Department of Education’s has the ability to provide defense of repayment discharges, which is a process that would eliminate debt based on the college’s alleged fraudulent actions.

The former student’s attempts to obtain discharges have been filled with issues, most stemming from the fact that the process has seldom ever been used and never to the extent it is needed for CCI students.

Due to the alleged fraud, students may be eligible for loan forgiveness of any federal Direct Loans, according to the Department of Education. The investigation process involving federal prosecutors, attorneys general and other agencies is ongoing. However, they have found evidence of fraud by CCI involving the use of inflated job placement rates and pushing students into high cost loans.

A report compiled by the Department of Education found that there are 79,717 people who are eligible to apply for loan forgiveness, but are instead dealing with debt collectors. Of those former students, 30,000 have had tax refunds, tax credits and other benefits seized, while 4,000 have had their wages garnished.

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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.