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VanDLaw
VanDLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 833
Experience:  Chapter 7 & 13
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This question is for VanDLaw. I am performing a Means Test calculation for a Border Patrol Agent and his pay stub shows standard withholdings for social security, medicare etc and a slew of other witholdings for things like health insurance, life ins, reitirement contibutions, repaymnet of a loan from his retiremnt and others. Should I list all these deductions for the Means Test calculation? What about on schedule I?
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 8 years ago.

HiCustomer

 

Yes put all payroll deductions on Schedule I. List the payroll deduction in "other" if they are not already on the schedule as a category and list what they are.

 

The means test calculation you would use those payroll deductions as a deduction on Part 2 if they do not meet the means test using gross income for the last 6 months. Insurance payments, health insurance payments, and other deductions you include for the means test and are on the form.

 

Retirement contributions if they are voluntary vary by district as to whether they are allowed. One jurisdiction thinks they should be allowed, and others think it is a way to keep money out of creditors hands since retirement accounts are exempt. You may want to check around your area with other attorneys to see how your court leans.

 

Thought this may help you:

"Current monthly income" (CMI) does not equal actual income. CMI is based on the average monthly income received from all sources during the six months prior to filing the bankruptcy case, ending on the last day of the month before the filing.

CMI consists of the following:

  • Gross (before tax and deductions) wages, salary, tips bonuses, overtime, commissions
  • Business income (net of expenses)
  • Rental and other real property income
  • Interest, dividends, and royalties
  • Pension and retirement income
  • Any amount paid by another person for the household expenses of the debtor, including child or spousal support
  • Unemployment compensation that is not a social security benefit
  • Any other income

 

If the debtor's Current Monthly Income is greater than the state median income, then you go to the next step. The debtor's CMI figure is reduced by various deductions, some of which are set national or local standard figures and some are debtor's actual expenses. CMI is reduced by the following deductions:

Deductions under Standards of the IRS

  • A marital adjustment for any amount that is included in CMI but not used for the contribution to the debtor or their dependents
  • The IRS National Standard for food, clothing, household supplies, personal care, and miscellaneous
  • The IRS local standard for housing and utilities not including mortgage expenses
  • The IRS local standard for mortgage and rent expense, reduced by the amount of the 60 month average actual mortgage expense (recaptured later in the formula), if any
  • Any adjustment to the housing and utilities standard
  • IRS Transportation Standards for vehicle operation
  • IRS Transportation Standards for ownership and lease expenses, reduced by the amount of the 60 month average actual secured vehicle payment (recaptured later in the formula), if any
  • Average monthly federal, state, and local income, self employment, social security, and Medicare taxes
  • Mandatory payroll deductions such as mandatory retirement contributions, union dues, and uniform costs
  • Average monthly term life insurance expenses for the debtor only
  • Any court ordered child or spousal support payments
  • Education expenses that are a condition of employment or required for a physically or mentally challenged dependent child
  • Child care expenses
  • Health insurances not covered by insurance or a health savings account
  • Telecommunications expense other than basic phone service such as cell phones, pagers, call waiting, caller id, long distance, internet service, etc. to the extent necessary for the health and welfare of the debtor and their dependents

Additional allowed expense deductions

  • Health insurance, disability insurance, health savings account contributions
  • Costs to necessary to support an elderly, chronically ill, or disabled member of the debtor's household or immediate family
  • Expenses actually incurred to maintain the safety of family under the Family Violence Prevention and Services Act
  • Documented home energy costs that exceed the IRS guidelines above
  • Reasonable and necessary documented children's education expenses (limited)
  • Additional food and clothing expenses, documented and strictly limited
  • Charitable contributions

 

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