tax estimates

September 19th, 2008 by Questions

Having only disability pension income, I will be required to make a monthly tax payment during my bankruptcy. My question is , `who` will hold onto this tax money? Also, I am afraid of the trustee estimating too high as this will result in a tax rebate which HE is entitled to keep.

Posted from: Ontario


One Response to “tax estimates”

, A licensed trustee said:

There are two very good reasons why you should make your tax instalments if you have filed for bankruptcy:

1) if you don’t then you may be creatigng a new debt during your bankruptcy and the Court frowns on that sort of thing; and

2) any tax instalments you make reduce your income for the purposes of surplus income payments during your bankruptcy. If you don’t pay the taxes then you can’t claim the deduction which may mean you’ll have to pay your trustee more in surplus income payments. What’s worse though is you’ll still owe the tax after your bankruptcy has been completed – in other words you’ll pay the trustee and the tax which doesn’t make much sense…

Something most people don’t realize is that you are NOT required to sign your POST bankruptcy tax refund over to your trustee. You have the right to prepare the return yourself and keep the refund, so if you are really worried that your trustee will over-estimate your taxes (why are you dealing with a trustee you don’t seem to trust?) tell them you’ll handle your POST tax return yourself and make sure you haven’t assigned your trustee the refund.

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