By Attorney Kristen Whelchel
- Most trustee will allow you to keep only $1,200 ($2,000 if you filed a joint case) of any taxes refund you get depending. If you are over withholding, you will most likely not be allowed to keep the money.
- If you are under withholding, you may owe taxes for upcoming years. Owing taxes for post-petition tax years, may cause you problems. The IRS could make a motion to have your case dismissed.
- If you are over withholding, your budget may incorrect and you may have issues making your Chapter 13 payments.
While in a Chapter 13, your goal should be to break even on your taxes each year. Consulting with your tax preparer is helpful in determining how much you should withhold.