February 15th, 2009 by Reed Allmand 
According to a case heard by the Utah Supreme Court (In re Smith, No. 20070892), tax refunds that result from an overpayment of income taxes on exempt retirement income would be exempt from seizure during a bankruptcy case. In this particular bankruptcy case, the debtor’s sole source of income was Social Security and distributions from a qualified pension plan. After the debtor filed bankruptcy, she received a $3,312 federal income tax refund. The tax refund was determined to be exempt property under the bankruptcy law because it was from an exempt source (social security and qualified pension) that was traceable.
A debtor filing for bankruptcy who had several sources of income, some exempt and some non-exempt may experience more difficulty convincing a bankruptcy court that an income tax refund derives from the exempt income not the non-exempt income. If you are considering bankruptcy, speak with a Dallas-Fort Worth bankruptcy attorney to find out how much of your income and assets are exempt from seizure by creditors during bankruptcy.
(Source: Consumer Bankruptcy News, Volume 19, Issue 6 page 5)
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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