As of February 20, the IRS says it processed about 50 billion 2014 income tax returns. 83 percent of these filers received an average refund of $3,120.
The number may be somewhat skewed, since taxpayers who anticipate large refunds tend to file earlier in the season. Over the past several years, about eight in 10 taxpayers qualified for an average refund of $2,800. The news was not all good, as Service officials acknowledged that budget cuts had triggered extremely long wait times on the IRS telephone hotline.
To help guard against hackers, the IRS suggested that online taxpayers sign up for an additional PIN.
Bankruptcy and Tax Refunds
Many people look forward to a large tax refund every spring, and they may even over-withhold a few dollars a month to put more change in the piggy bank. Other people question the wisdom of this approach, as they view an income tax refund as an interest-free loan to the government.
Financial windfalls like a tax refund, lottery prize, escrow refund and inheritance are all part of the bankruptcy estate, and all assets in the estate are subject to distribution among the creditors, unless the asset is exempt. When you file bankruptcy, all anticipated windfalls, and their expected value, should be listed on Schedule B. If you file Chapter 7, the additional money should not affect the means test. If you receive an unexpected windfall, you can generally amend Schedule B without affecting the discharge date.
Most filers in New Jersey use federal exemptions, so the cash windfall can be exempted under the federal wildcard, in many cases. In most courts, a Chapter 13 trustee does not ask a filer to turn over a tax refund, so the issue may not even come up.
Contact John Hargrave and Associates
We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.