What can you buy with your tax refund?

Now I’m meeting with clients who have a large tax refund coming to them next year (in 4-6 months from now).  If we file a chapter 7 now, before they receive it, the chapter 7 trustee will take it, all of it.

So what do you do?  Spend it.

If we can wait to file bankruptcy until after you receive your refund, you won’t lose it.

So let’s say you get your refund March 1, 2014.  What do you do?

Better said, what don’t you do:

1.  Don’t go buy a new toy like a dirt bike or a tv.

2.  Don’t pay off any friends or family.  This is a preferential transfer, to an insider no less, and it results in Mom and Dad being sued by the trustee.

So what do you do:

1.  Spend it on exempt items under Utah Law.  This basically means food, clothing, washer, dryer, fridge, freezer, stove.

(Did you see a computer on the list?  No.   Don’t ask me if that’s okay.  It’s not).

2.  And use the rest to pay me.  :)

So let’s say you spend the tax refund on food storage March 1st and keep all of your receipts.  When can you file?  March 2nd.

Here is a relevant portion of the

Utah Exemptions Act, Utah Code Title 78B Chapter 5, Section 505

An individual is entitlted to an exemption in …

  (viii) (A) one:

            (I) clothes washer and dryer;

            (II) refrigerator;

            (III) freezer;

            (IV) stove;

            (V) microwave oven; and

            (VI) sewing machine;

            (B) all carpets in use;

            (C) provisions sufficient for 12 months actually provided for individual or family use;

            (D) all wearing apparel of every individual and dependent, not including jewelry or furs; and

            (E) all beds and bedding for every individual or dependent;

This is not legal advice.  If you need legal help go to www.robertspaynelaw.com.

 

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