As a paralegal, I often skim through tax returns when preparing documents for the attorneys. I also prepare taxes January through April 15th every year and go through about 60 hours of continuing tax law education per year. The other day I received some tax returns from a client going through a bankruptcy and I was able to give her wonderful news. Earned Income Credit is exempt from the Trustee, so if a person is due a tax refund, the portion of the refund that is part of the Earned Income Credit cannot be taken in your bankruptcy. This particular client qualified for the Midwestern Disaster Relief exemption which increased her Earned Income Credit by almost $2,000 but it wasn’t claimed on her 2008 taxes. We were able to amend her tax return and get her the extra $2,000 that she needed without the Bankruptcy trustee being able to take it to pay off her debts.
This is just another way Davenport Law Offices goes over and beyond the basics of bankruptcy by not just using the numbers you give us, but by correcting past taxes to help you keep all the money you can.
The Midwestern Disaster Relief credits cover Earned Income Credits as well as some others like Education credits, which are not exempt from the trustee’s powers. Anderson, Alexandria, Pendleton, Lapel, & Middletown were all included in the Midwestern Disaster Area as well as all of Madison County, Marion County, Hamilton County, and several others. Delaware County is NOT a Midwestern Disaster Relief Area.