DoI need to wait to file my tax returnuntil Iget my discharge so that I can keep my refund?

I filed for bankruptcy on 01/07/11. My meeting was on02/01/ 11 and I’m scheduled to be discharged on 04/01/11. I have not filed my 2010 tax return yet. Will the trustee take my refund? Does it make a difference if I wait untill I get my discharge and then file?

Asked on March 20, 2011 under Bankruptcy Law, California


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Well, that depends on a bunch of factors but when you file and the return is issued may not latter at this point.  It is out there as an asset.  The trustee needs to determine if the amount of the refund worthy of administration (i.e., is it worth the time and effort?).   This is an issue of local practice and will often vary from court to court.  What also needs to be determined is if any portion of the refund for Earned Income Credit?  Some states have specifically exempted Earned Income Credit so it is necessary to check state law on this issue.  Next you need to determine if your State has a “Wild Card” or “Cash” exemption.  Some states allow a certain amount of cash to be treated as exempt from creditors, other states have what is refereed to as a wild card exemption that will allow a debtor to exempt an item that is otherwise not exempt.  Check with your attorney on these issues.  Good luck.

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