Exemption of Income Tax Refunds
I received an interesting question about whether Florida Statute 222.25(3) exempts all income tax refunds. The statute exempts a debtor's interest in a refund or a credit from a financial institution pursuant to s. 32 of the Internal Revenue Code. I looked up Section 32 of the Revenue Code and found that it applies to the earned income tax credit. Earned income tax credits are exempt from creditors, and in bankruptcy, any portion of a debtor's tax refund which comes from the earned income credit is not part of the bankruptcy estate. All other income tax refunds are non-exempt and are subject to levy by general judgment creditors and bankruptcy trustees.
What if my husband file chapter 7, I did not, and we filed a joint tax return. The check came to us addressed Mr. AND Mrs. do get to keep my half? Someone told me about the Fifth Element Anderson Rule, stating 100% ownership to each of us. I did not work for the year as I am a stay at home Mom, but I am also told that does not matter. Please help!
Ronnie
I don't understand how a tax refund is not considered to be a return of a person's wages. The reason for a refund is that the government took wages along with taxes and is refunding the amount of WAGES it withheld. Those are actually wages being refunded, not taxes. If the government was given $15,000 of my money, but I actually only owed them $10,000 for taxes - they withheld $5000 of my WAGES and are giving it back. Moral of the story -increase your deductions so your wages come to you in your paycheck and not in your "tax" refund.