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New Ohio Law Exempts Child and Earned Income Credit

by Brett Weiss, Maryland Bankruptcy Attorney on October 26, 2008 · Posted in Bankruptcy Cases & Legislation, Bankruptcy Practice and Procedure, Benefits of Bankruptcy

Child tax credit and earned income credit are now exempt in Ohio putting these sums of money out of reach of creditors and bankruptcy trustees.

The new Ohio exemptions statute that went into effect October 1, 2008, has the following provision: 2329.66(A)(9)(g) Payments under section 24 or 32 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C. 1, as amended.

This new provision exempts the child tax credit and earned income credit on federal income tax returns.  These refundable credits can result in substantial tax refunds for working middle-class Americans with dependent children in the home.

Unlike Ohio, most state laws do NOT exempt child tax credit, earned income credit or tax refunds.  Do NOT spend any tax refunds without express permission from your bankruptcy trustee.  Debtors should consult with their own attorneys to determine what law applies to their own bankruptcy cases BEFORE spending any tax refunds.  Ohio debtors should find out from their attorney if the new law applies to their bankruptcy cases filed prior to October 1, 2008.

Spending tax refunds that belong to the bankruptcy estate can result in denial of the bankruptcy discharge and a referral to the F.B.I. for criminal investigation.

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