If I am self employed, what income will they use for bankruptcy, my 1099 or my income tax return? 30 Answers as of April 01, 2014

My income on 1099 is around $75,000 but I go in the red almost every year on tax returns. I want to file a complete bankruptcy.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You prepare a profit and loss statement for the last 6 months, money and money out for expenses. So you report the gross and you report expenses.
Answer Applies to: California
Replied: 4/1/2014
Ronald K. Nims LLC | Ronald K. Nims
Your income for bankruptcy purposes is your current income, the bankruptcy trustee will use your tax return as an indication of your current income. The bankruptcy trustee will seldom or never see your 1099s - in 20+ years of bankruptcy filings, I've never had a trustee request 1099s.
Answer Applies to: Ohio
Replied: 3/31/2014
EDWARD P RUSSELL | EDWARD P RUSSELL
The net income (after deductions) should be the income for Schedule I and for the Means Test.
Answer Applies to: Minnesota
Replied: 3/31/2014
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
Give your attorney all your income information. They will need the gross income and also the tax returns. You are correct that you must disclose all financial information. All your income, all your debts, all your assets and expenses. You will be signing under penalty of perjury that you have completely disclosed everything. If you are considering doing it yourself, you need to study a lot more information before making the attempt. The fact you asked this question tells me you are unaware of too much information to succeed on your own at this point. Most of the cases that I see with problems are the people who do it themselves. I know of one pro se case that was successful and that person studied the NOLO book, read the court website for pro se filers and studied the local rules. After over a month of studying full time plus a consult with a knowledgeable local bankruptcy attorney they filed their case. You need to understand the Federal law, the State law, the Local Rules and the local customs to be successful.
Answer Applies to: California
Replied: 3/31/2014
Stephens Gourley & Bywater | David A. Stephens
Likely your 1099.
Answer Applies to: Nevada
Replied: 3/31/2014
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    The Chapter 7 means test requires an analysis of your income for the 6 months previous to the month you actually file your case with court. For example, if you filed today March 27, 2014, the court would add up all your income from whatever source (except Social Security), and divide it by 6 and this would be your means test income. It normally doesn't matter what you made last year or in previous years.
    Answer Applies to: California
    Replied: 3/28/2014
    Rosenberg & Press
    Rosenberg & Press | Max L. Rosenberg
    I would need to see the last six months of paystubs for one form (The Means Test) and current income for schedule I. Contact me for further information regarding filing. 203.870.6700.
    Answer Applies to: Connecticut
    Replied: 3/28/2014
    Law Offices of Eric W. I. Anglin
    Law Offices of Eric W. I. Anglin | Eric W. I. Anglin
    They will look at your business income and expenses. I suggest that you consult with an experienced bankruptcy attorney to assist you with a bankruptcy.
    Answer Applies to: Indiana
    Replied: 3/28/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    You must use your gross income, so the 1099 income.
    Answer Applies to: Nevada
    Replied: 3/28/2014
    Danville Law Group | Scott Jordan
    Income is money earned over the last 6 months. As self-employed, you will need to provide proof of payments, either checks or bank statements. Have you hired an attorney? As a self-employed individual, file bankruptcy pro se is risky. I suggest you spend the money on an attorney for piece of mind and to make sure you obtain your "complete bankruptcy" discharge.
    Answer Applies to: California
    Replied: 3/28/2014
    Michael B. McFarland, P.A. | Michael B. McFarland
    If you are self-employed, many of your business expenses can be used in the means test to reduce your income. However, due to certain court decisions, it's not as simple as it should be. Consequently, you should consult with an experienced bankruptcy attorney for assistance.
    Answer Applies to: Idaho
    Replied: 3/27/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    Your Income Tax Returns. Bottom line is you need to be able to fund a Chapter 13. Do you have any disposable income after all of your monthly living expenses? That will be the issue. If you can not fund a Chapter 13, you are not a candidate for a CH13. It's not rocket science - it is very practical.
    Answer Applies to: Colorado
    Replied: 3/27/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    You will need to prepare a profit & loss statement on a month by month basis. Be sure your business expenses do not include any of your home expenses and don't try taking an expense for a home office because it won't fly with the bankruptcy court. Exactly how the numbers will be used will depend on whether you proceed in Chapter 7 or through Chapter 13.
    Answer Applies to: Nevada
    Replied: 3/27/2014
    Rhymer Law Firm
    Rhymer Law Firm | William Rhymer
    If you are considering a Chapter 7 fresh start, you can take your gross revenue, subtract your business related expenses, and use your net income before taxes. If you want to do a Chapter 13 pay back plan, a different set of rules apply. I would suggest you talk with a qualified bankruptcy attorney to discover your options.
    Answer Applies to: Georgia
    Replied: 3/27/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    The "means test" looks at gross wages but business income is allowed to be offset by ordinary and necessary business expenses, so your net income for the previous 6 months is used. Therefore, it is likely that you would qualify for Chapter 7 which is what I assume you mean by a "complete" bankruptcy. Be aware that the trustee becomes responsible for your business during your bankruptcy so they will expect you to have complete liability coverage if you intend to continue in business after filing your case.
    Answer Applies to: Oregon
    Replied: 3/27/2014
    Kenneth A. Parker, P.C.
    Kenneth A. Parker, P.C. | Ken Parker
    In order to file a Chapter 7 Bankruptcy, you must pass the means test. The initial look at the means test is a "Gross" look. This means looking at?your income over the past 6 months without taking any deductions.?If you fail the means test by the "Gross" look, we can take a look at the "Net",?which means we can look at your Gross income and deduct certain items from your Gross income. Since you receive a 1099, we also need to look at bank statements and ask some questions such as do you have a company or are you a 1099 employee?
    Answer Applies to: Georgia
    Replied: 3/27/2014
    The Law Offices of Deborah Ann Stencel | Deborah A. Stencel
    Your gross income and business expenses will be considered. See an attorney.
    Answer Applies to: Wisconsin
    Replied: 3/27/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    They will want to oo at both but they use your 1099.
    Answer Applies to: California
    Replied: 3/27/2014
    Heineman Law Office
    Heineman Law Office | Jeff Heineman
    On the Federal Means Test you would use the amount of income that you earned for the six full months prior to the month that you file, but you would also deduct your business expenses as well. From you description of yearly tax returns, you should not give rise to the presumption of being a Chapter 13. The second part of the test is to see if you have anything remaining when you subtract your regular monthly expenses (both business and personal) from your regular monthly income. It sounds like you will be a Chapter 7.
    Answer Applies to: Idaho
    Replied: 3/27/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    See an attorney and do it correctly.
    Answer Applies to: Michigan
    Replied: 3/27/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    Neither, in all honesty. You will need to calculate your actual cash flow specifically for the last six full months before your case is filed. If you ate self employed I cannot urge you strongly enough to hire a lawyer and not to try to file by yourself. There are many pitfalls!
    Answer Applies to: Colorado
    Replied: 3/27/2014
    Fluhr & Moore, LLC | Steven S. Fluhr
    The court uses your actual income.? So in your case, it would be gross receipts minus legitimate business expenses.
    Answer Applies to: Missouri
    Replied: 3/27/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Depends on what is considered income.
    Answer Applies to: Florida
    Replied: 3/27/2014
    Law Offices of A. J. Mitchell, LLC
    Law Offices of A. J. Mitchell, LLC | A. J. Mitchell
    Sounds like you are interested in a Chapter 7. I would like more information from you before advising in this regard.
    Answer Applies to: Georgia
    Replied: 3/27/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    You will have to do a worksheet showing your income and expenses for each month. They also usually look at your tax return to see if they match-up.
    Answer Applies to: Michigan
    Replied: 3/27/2014
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    They will consider your gross adjusted income.
    Answer Applies to: New York
    Replied: 3/27/2014
    Mark S Cherry, Attorney at Law, PC
    Mark S Cherry, Attorney at Law, PC | Mark Cherry
    The 1099 reflects business income before expenses. Your income is the net profit from the business. You will? have to provide monthly "Profit and Loss" statements as the tax return data is usually stale dated and not the most recent. Be cautious of knowing whether your self-employed?business assets (accounts receivable, equipment) are exempt or not.
    Answer Applies to: New Jersey
    Replied: 3/27/2014
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    With all due respect, please take your materials, your 1099 and tax returns to your bankruptcy counsel. Income vs Expenses is for the Means Test and the Schedule I and J. While your 1099 Income is 75,000, that clearly means that no taxes are taken out. What about your estimated tax payments? All of these things get taken into account by a good bankruptcy lawyer, so find one in your jurisdiction and get with them.
    Answer Applies to: New Jersey
    Replied: 3/27/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    They will use the last 6 months of your income.
    Answer Applies to: New York
    Replied: 3/27/2014
    Meister & McCracken Law Firm, PLLC | Joanne M. McCracken
    When you are self-employed, the income considered for means test purposes is the gross business income minus the business related expenses. The means test is the determination of your eligibility for Chapter 7the complete discharge of debtbankruptcy. Your bankruptcy attorney will know how to calculate your true income for means test purposes.
    Answer Applies to: Arkansas
    Replied: 3/27/2014
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