I have a family of 4, but I claim 6 on my paychecks to avoid owing taxes at the end of the year. What amount can I use for the means test and how would I calculate it?
Your income/expenses are imported off Schedules I and J into the form B22A. They have to match.
Unless your income exceeds the gross income for a family of four in AZ which is $68,900.00 I am not sure it matters what your withholding is.
Click on "Find a Lawyer" above and locate a bankruptcy attorney in your area to go over all of your financials, all of your property, and determine what property is exempt, and how best to protect your rights.
When you try and file on your own, almost inevitably you end up in trouble with someone.
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In CA, copies of your pay stubs for the most recent 60 days must be attached to your budget so it is best that the numbers on your budget match up with what is on your pay stubs. As far as the amount your employer is withholding is concerned, you are mixing apples with oranges. Your family size of 4 is not the same thing as claiming 6 exemptions. Other living expenses may justify 6 exemptions even though there are only 4 persons living in the residence.
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I have no idea what your income is, the amount that you owe at the end of the year in taxes or the amount of your refund. However, I have found many people allow federal taxes to be taken out of their paycheck even though their income is low enough that they will receive child tax credits on each child that is 16 or younger and receive earned income credit on children that are still dependents even though the child is 21, sometimes older. Some times these clients have a refund of $5,000.00 or more, yet they made the mistake of letting the IRS take money from their weekly, bi-weekly, semi-monthly or monthly pay check, increasing their tax refund, but yet they are struggling to make ends meet during the year. You may be authorized to claim as many as 9 allowances on your W-4. Read the instructions on the top of the W-4.
As to your question, if your family's income is above median, then the amount of taxes that are deducted from you pay is an expenses on the Form 22 on line 16 of your Form 22. There a some items that a predetermined by IRS standards and others that can vary. An experienced bankruptcy attorney can make sure that you take advantage of every deduction that your are entitled to take.
You really need to take the time to meet with an experienced bankruptcy attorney that handles chapter 7 and chapter 13 cases. Most attorneys will meet with you at no charge for the initial appointment. You can use the Avvo "Find a Lawyer" link at the top of this page to search for an attorney.
Answers and comments provided are for general discussion only. My comments are not to be considered legal advice and they do not create an attorney-client relationship.
This is something you should discuss with whichever local attorney you are using to file your bankruptcy. He or she will be best qualified to look at your situation as advise you as to what the United States Trustee in Arizona is currently allowing. What you claim is not always determinative.
You are able to claim all taxes actually withheld from your pay during the past 6 month. The w4 form that you give to your employer is irrelevant to any issue other than what your employer is instructed to withhold. No one other than your employer ever looks at this form. Hope this perspective helps
As you can see from the answers bankruptcy is a very complicated process. As was also suggested it is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. I am attaching a link to some free videos that explain how bankruptcy works. Most Arizona consumer bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Please take time to educate yourself about bankruptcy and to determine which attorney is the best to assist you in the process. Make sure to talk to the attorney you will be working with, not a staff person. When interviewing the attorney ask them how long they have practiced bankruptcy law. Ask what percentage of their practice is focused on consumer work. Ask whether they are experienced in both chapter 7 and chapter 13 cases. Ask the attorney for references. Ask about their policy of returning phone calls. They should be committed to answering specific questions about your situation and help you understand your options. If, after talking with them you are still confused about the issues you raised, find another attorney. Check them out with the various ranking sources: such as www.AVVO.com, and the State Bar. An attorney is should be your guide through this process. They should educate you, be there to assist you in how to avoid pitfalls and help you plan for your future after bankruptcy. There are hundreds of “bankruptcy” attorneys in Arizona. Of those just a few will fit the criteria set forth above. Again, bankruptcy is a very complicated process and you want to use an attorney who will be there when you need them.
This firm is in the business of helping people and companies file for bankruptcy protection. Therefore, the bankruptcy code requires that we call our firm a "debt relief agency." This information is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the related issues. Nor is this advice intended to create a client - attorney relationship. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information.
You enter the exact amount withheld in the last 6 months prior to filing your case. If you over withhold, you should be aware that the trustee will get your tax refund for the following year, and any refund owed to you but not received at the time your case is filed. Tax refunds are a non-exempt assets in Arizona bankruptcy cases. So over withholding to pass the Means Test my not be the best idea. The trustee can always dispute your Means Test if they believe you can afford to pay your debts and should actually be in a Chapter 13. It's best to consult with an experienced bankruptcy attorney before you file. I can offer you a free consultation. Hope this helps. Good luck.
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