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Yes, if the tax returns were filed when due or at least 3 years before the date of filing the bankruptcy. This is a complex area with a lot of exceptions or requirements to meet. Consult an experienced bankruptcy lawyer.
Some income taxes are dischargeable in bankruptcy, such as 1040 tax liabilities, however some will remain with the bankruptcy, for example, 941 payroll tax liabilities and trust fund. The tax code is complicated, taxpayer need a better understanding of tax code and bankruptcy laws to deal with a tax debt.
Yes.
Suprisingly it is a fairly low (I believe 7th position) claim against the assets.
Generally speaking, income tax debt can be discharged if the tax was assessed more than three years prior to the filing of the bankruptcy petition. Note that it is from the time the tax was actually assessed against you (generally the date you filed the return). So if you filed your 1999 tax return 5 years late, you'd still have a bit of a wait before that would be dischargeable under bankruptcy.
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What are tax implications of debt discharged in a chapter THIRTEEN bankruptcy?
Unless it is a tax debt, none. Discharged debts are not income to the debtor.
We are in bankruptcy. Do we have to pay our income taxes that we owe from 2008 or can they be entered into the bankruptcy debt?
Unfortunately, you will have to pay your income taxes from 2008, even after your bankruptcy is finalized. Federal law prohibits income tax debt from being discharged, so you will still owe, but you may find that they stop attempting collection until after your bankruptcy case is complete. You may want to ask your bankruptcy lawyer if he has tax experience so that he can act as your tax lawyer in dealing with the IRS to settle the debts you owe them as well.
Chapter 7 bankruptcy dismissed can they still garnish?
Only holders of undischarged debt can come after assets or income after a discharged bankruptcy. Some debts may not be dischargeable in a bankruptcy, such as tax debt. The meaning of dismissed is different from discharged, however. A dismissed bankruptcy would be one that did not conclude. In that case, creditors may attempt any legal means to recover what is owed.
Can the bankruptcy court take the child tax credit or earned income from your taxes?
This would depend on what type of chapter you are filing and at what point it is discharged. If you have already been discharged from the debt then the answer is no. If not, you should have had to provide copies of previous tax returns and this issue would be brought up during the hearing.
Can bankruptcy be written off in taxes?
No...and in fact it will have a much greater chance of costing you tax - because any debt that was discharged becomes TAXABLE INCOME...(because you received what you didn't pay for...the same as income)....and you will likely get many Form 1099 C for that. However, if the BK was properly handled, it provides a method to have IRS excuse this tax debt too.
Can you file income tax on your bankruptcy?
State Income Tax Claims, Federal Tax Claims, and Real Estate Taxes must be included in a bankruptcy filing. Income tax claims that are less than three years old will usually be consolidated with other debts and paid over three to five years in a Chapter 13. Depending upon income and assets, income tax claims for returns that were filed more than three years before the bankruptcy can sometimes be reduced substantially in a Chapter 13 and eliminated completely in a Chapter 7.The discharge of the debt in a bankruptcy, can actually cause taxable income for the year it is discharged if not handled proerly. You will get a 1099-C for most matters concering it.
Can you file bankruptcy to pardon debt for owing back income taxes?
You can discharge income tax debt in bankruptcy only under certain circumstances. The rules are discussed in IRS Publication # 908. I have added a link to the one from 2009, but check with your tax adviser for any updates.
What if any are the tax inplications of debt discharged in a chapter 7 bankruptcy?
Chapter 7: This chapter of bankruptcy law provides for a full liquidation of an entity's non-exempt property to satisfy creditors, and discharges all dischargeable debts This is a legal process under Federal statutes that provides for rehabilitation of a debtor through the discharge of certain debts or through a debt repayment plan over a certain period of time. Creditors cannot contact the debtor during the bankruptcy. They must wait until it is fully discharged. There are three chapters of bankruptcy == == == == I can't give a definitive answer, but I can relate what I have seen. I suppose to get a definitive answer one would need to look at the Tax Code, and I stay as far away from that as possible. However, I have never had a client come back and say they had any negative tax implications as a result of discharged debt in bankruptcy. I know the IRS can normally pursue forgiven debt as income, but for some reason (either because the Tax Code doesn't permit them to or because they simply opt not to) the IRS has never pursued any of my clients for forgiven (discharged) debt in bankruptcy to my knowledge. I have had a couple of situations where mortgage companies sent tax statements to clients who surrendered real estate in bankruptcy, but so far we have managed to get those resolved without any negative tax consequences. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person. While cancelled debt is typically includible under the Internal Revenue Code as gross income, there are certain exceptions: 1. Debt that is cancelled through a bankruptcy is NOT taxable as income, 2. Debt cancelled when you are insolvent is NOT taxable as income to the extent of your insolvency. Therefore, there are no tax implications and it does not have to be reported on the tax return. The creditors will send you a 1099-C for cancellation of debt, but they should also check the "bankruptcy" box. Make sure they do this. :)
How can creditors size a tax refund check one year after filing chapter 7 bankruptcy?
The answer depends on who the creditor is and the status of the debt. If the debt was a student loan or other non-dischargable debt, then your tax refund can be taken. If the debt WAS discharged, ANY collection action of any kind on a discharged debt is a violation of the permanent injunction of the discharge and therefore illegal. If the creditor was not included on the creditor matrix, then informing them of the bankruptcy and discharge of the debt may be all that is necessary to have the refund returned to you. In other cases it may be necessary to file a Motion for Contempt against the creditor in bankruptcy court. This would require the re-opening of the bankruptcy.
Is a debt dischargable?
Some of the debts that cannot be discharged in a bankruptcy are, income tax arrearages (depending upon the time frame), child support, secured debts where the property is not subject to forfeiture, child support, spousal maintenance (in some cases) and all other debt the bankruptcy trustee certifies as being ineligible for discharge. Decisions made by a bankruptcy trustee can be appealed to the court if the filer believes they are not valid.
What is a non-dischargable debt?
Some of the debts that cannot be discharged in a bankruptcy are, income tax arrearages (depending upon the time frame), child support, secured debts where the property is not subject to forfeiture, child support, spousal maintenance (in some cases) and all other debt the bankruptcy trustee certifies as being ineligible for discharge. Decisions made by a bankruptcy trustee can be appealed to the court if the filer believes they are not valid.
Do you keep a tax refund after bankruptcy?
Has the chapter 13 bankruptcy been discharged (completed)? If not then in your bankruptcy agreement for repayment it probably states that you must surrender any tax return to the repayment schedule. Read your entire agreement and consult with your attorney to be sure.
