Reduce Your Tax Refund Loss in Bankruptcy Lawfully
By Jill Michaux, Kansas Bankruptcy Attorney on Oct 11, 2007 in Bankruptcy Practice and Procedure, General Bankruptcy Information, Kansas, Personal Finance, Protecting Assets In Bankruptcy, Tax Issues
Here are three strategies to lawfully minimize the amount of tax refunds you will forfeit to your bankruptcy trustee if you cannot exempt the refunds in your bankruptcy case.
1) You can reduce your income tax withholding by filing a new Internal Revenue Service Form W-4 with your employer. This strategy should only be followed if you are withholding too much tax. It is a bad idea to underwithhold tax, incur penalties and owe tax at the end of the year you may not be able to pay!
2) If you are eligible for earned income credit, you can get up to $1712 in advance with your paycheck by turning in a Internal Revenue Service Form W-5 to the employer.
3) You may assign your tax refunds to your bankruptcy attorney as I have described in a previous posting, Debtors Defeat Bankruptcy Trustee in Battle Over Tax Refunds.
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