What counts as income for the means test?

What counts

Wages and salary (gross, before withholding), self-employment and gig income, bonuses and commissions, rental income, unemployment in most districts, pension and retirement plan income, interest and dividends, and any money someone else regularly contributes to your household bills, like a partner covering rent. If you’re married, a non-filing spouse’s income enters the picture too for household purposes, with an adjustment for the spouse’s own separate expenses.

What doesn’t

The headline exclusion: Social Security benefits, retirement, disability (SSDI), and SSI, don’t count toward means test income at all. For a lot of retirees and disabled filers, that single rule decides the test before it starts. A handful of narrow exclusions also exist for things like certain veterans’ and disaster payments.

Why the month you file matters

A six-month average has a memory. A layoff three months ago hasn’t fully faded from the average yet; each month you wait, a high-earning month drops out and a low one enters, and the average falls. The reverse is true too: file quickly after income jumps and the average is still low. This is why two honest filings a month apart can land on opposite sides of the median, and why “when should I file” is a real strategic question, not paperwork trivia. It’s also why a one-time event in the window, a bonus, a 401(k) withdrawal that counts in your district, can distort the picture; sometimes the answer is simply waiting for it to age out of the six months.

Below median, above median

Add up the countable income, multiply by twelve, and compare it to the published median for your household size in your state (the figures update a few times a year). At or below median: the means test is over, Chapter 7 is presumptively available, and a Chapter 13 plan, if you choose one, can be three years. Above median: you’re not disqualified, you’ve just been handed the long form, covered in I’m above the median income. Can I still file Chapter 7?.

The bottom line

Bring six months of pay stubs and a list of every deposit source to a consultation, and be complete; the trustee sees the same bank statements you do. The good news inside the strictness: the six-month window is knowable in advance, which makes it plannable. Timing a filing around the average is not a trick; it’s the system working as written.