ST. LOUIS (CN) – A Minnesota housewife is unable to claim a tax refund as an exemption because she did not earn the money herself, the 8th Circuit ruled.
Coalee Carlson appealed after the Bankruptcy Court sustained the Chapter 7 Trustee’s objection to her exemption claim.
Coalee and her husband, Brian, used their tax refunds of $13,842 to pay household bills. Both claimed half of the refunds on Schedule C of their returns. Without Coalee’s exemption, $6,186 would not be exempt.
During oral argument, Coalee’s attorney conceded that a spouse’s income belongs to that spouse until it is converted to joint property.
“It follows, then, that the taxes withheld from such spouse’s income would likewise be that spouse’s property,” Judge Federman ruled.