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jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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Customer Question

Submitted: 9 years ago.
Category: Tax
Expert:  M. Castillo replied 9 years ago.
Hello, and welcome to Just Answer!

It looks like your question was cut off. Please retype it so we can assist you.

Thank you!
Customer: replied 9 years ago.
I filed chapter 7 bankruptcy without an attorney. Everything is fine, but at my meeting of creditors I was told that my tax refund was property of the court. I would like to amend my schedule c to claim my 2007 tax refund as exempt but I can't find anywhere what law to use on the form to claim my refund as exempt. Please help
Expert:  M. Castillo replied 9 years ago.
Thanks for the additional information. I'm going to move your question to the appropriate category and have an expert familiar with this situation help you out.

Best wishes!
Expert:  jgordosea replied 9 years ago.


Sorry, but a tax refund is property of the bankruptcy estate unless there is another exemption available. The refund amount due to you is treated much like cash you have in the bank, or on hand, when you filed the bankruptcy.

Usually, if you file your bankruptcy after January 1, but before you received your refund, the Chapter 7 Trustee will take your share of the entire refund. Often, when the filing is earlier in the year the amount taken will be prorated to the date of filing.

There may be some differences due to state law. For example, in New York you can file for a cash exemption if you are not a homeowner that takes the homestead exemption. See the article at bankruptcylawnetwork

Each state's allowable exemptions differ. Tax refunds are not exempt anywhere just because they are refunds.

I hope this helps even though it is likely not what you wanted to hear.

Customer: replied 9 years ago.
I filed my bankruptcy in December, had my meeting of creditors Jan 10 and that's when the trustee told me about taking my refund. He told me I could amend my schedule C and put the refund on it. So I know there is a way it can be done. I live in Oklahoma so the site for New York didn't help me at all. I have the federal law that makes the refund exempt so if nothing else, I guess I can try that and see what happens, but I think the state law is in conjunction with the federal. Is there any way you can help??
Expert:  jgordosea replied 9 years ago.


I did find a case in regard to tax refunds in Oklahoma claiming to be exempt under Okla. Stat. tit. 31, § 1.1 which exempts "that portion of any earnings from personal service necessary for the maintenance of a family or other dependents supported wholly or partially by the labor of the debtor." The court ruled that the tax refund was not exempt under that Okla. statute

The entire case is at

From that case:

Oklahoma has opted out of the federal exemptions and instead has limited its exemptions to those provided under Okla. Stat. tit. 31 and other provisions of state law. See Okla. Stat. tit. 31, §1(B) ("No natural person residing in this state may exempt from the property of the estate in any bankruptcy proceeding the property specified in subsection (d) of Section 522 of the Bankruptcy Reform Act of 1978, Public Law 95-598, 11 U.S.C.A. 101 et seq., except as may otherwise be expressly permitted under this title or other statutes of this state."); see also Linn, 52 B.R. at 64 (noting that Oklahoma has "opted out" of the federal exemptions). Accordingly, we must decide whether state law, as opposed to federal law, allows an exemption for state and federal income tax refunds.

From the above, it is obvious that the tax refund must still be exempt under Okla. Stat. title 31 ; but I can not give a legal opinion and this forum is not conducive to gathering all the information need for me to give proper guidance on your particular situation.

Your right to a tax refund is an asset just like any other, subject to administration by the trustee. IF the trustee says to list it then you should follow the trustee instructions. Since I am not aware of the other amounts that are listed and whether those amounts exceed the allowable exemptions I must defer to the trustee on the propriety of putting the refund as exempt.

The Oklahoma Bar Association has an article at that answers "What property may the debtor claim as exempt?" and that confirms 'Oklahoma has "opted out" of the federal bankruptcy exemptions so debtors may not select between federal bankruptcy exemptions and the Oklahoma exemptions.'

I hope this helps in regard to your tax refund and Oklahoma Bankruptcy exemptions.

Best wishes.