When the means test look back period for a well paid individual includes the end of the year, a bankruptcy lawyer cannot rely on the paystubs to define the tax deductions. That’s because contributions to Social Security and other some other taxes are capped at certain income levels. Wages above the cap are not subject to the tax.
The expense side of the B22 is forward looking. It calls for the taxes your client will incur monthly in the future. For the highly paid filing in February, the pay advices may show little or no Social Security tax in the late year pay stubs.
My solution was to look to the year end paystub which shows the year to date contribution for each of the taxes where less than 100% of earnings are taxed and divide the annual tax by 12. Voila, I had the monthly average Social Security contribution for the debtor, going forward.
Image courtesy Ezola