Bank finance articles and tips

Every year at about this time Congress starts thinking about what tax laws will expire on December 31, and what it really needs to be doing about these. Of the 65 various tax provisions that will expire, one of the big ones is the annual "Patch" for the Alternative Minimum Tax. Without the Patch, nearly 30 million new taxpayers will wake up on New Year's Day with a lot more than the usual hangover, and the 4 million already in the AMT had better get their checkbooks out for the additional taxes they'll owe. In addition to this one item, however, there are several other extenders that also can have a direct impact on AMT payers....

In 2005 Congress reformed the Bankruptcy Code and created what is called the Means Test. One of the key components of the Means Test is the calculation of current monthly income to determination if someone has monthly disposable income. Disposable income is theoretically the amount of money someone can afford to pay back their debts each month. If there is disposable income, then that income should be paid to creditors in a Chapter 13 bankruptcy case and a Chapter 7 bankruptcy should not be filed. So what is income when filling out the Means Test?

Generally all income earned or received during the six-month period prior to a bankruptcy case being filed must be included in the Means Test, or "All figures must reflect average monthly income received from all sources, derived during the six calendar months prior to filing the bankruptcy case, ending on the last day of the month before the filing. If the amount of monthly earnings varied during the six months, you must divide the six-month total by six, and enter the result on the appropriate line." The earnings listed is therefore a six-month average. The result of the six-month average can vary widely depending upon whether income is received from self-employment, or someone is employed and receives a salary that stays the same each month.