Joint Tax Refund Ownership in Bankruptcy

16 Aug Joint Tax Refund Ownership in Bankruptcy

Judge Rosenthal, United States Bankruptcy Judge for the District of Massachusetts, recently decided the issue of who owns a joint tax refund in bankruptcy. The Court held that when a debtor and non-debtor spouse file a joint tax return, any tax refund will be presumed to be jointly owned in equal portions by the spouses.

Therefore, when only one spouse files bankruptcy and is entitled to a tax refund with his spouse, the spouse may keep one-half of the refund while the other half becomes property of the bankruptcy estate. Depending on the nature and extent of the debtor’s assets, the half portion of the tax refund may be subject to exemption after passing into the bankruptcy estate. The presumption of joint ownership is rebuttable only in narrow circumstances.
See In re Trickett, No. 07-44418-JBR (Bankr.D.Mass.2008).

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