How does filing for bankruptcy affect your taxes and why? 13 Answers as of May 12, 2015

How does filing for bankruptcy affect your taxes?

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Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
Filing for bankruptcy should not affect your taxes in any way.
Answer Applies to: Colorado
Replied: 5/12/2015
GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
There are general principals regarding taxes and bankruptcy. These general principals can be altered any number of ways. For example, filing a tax lien can change the status of what may be considered a tax obligation that would normally be dischargeable in a bankruptcy. This is no time to skimp. Pay an experienced bankruptcy attorney for one or two hours of their time to get your answers. You should pull a tax transcript for your meeting to make the meeting as productive as possible. There are also third party vendors who will pull your tax transcript, and give you a letter outlining what taxes are dischargeable, and when's the best time to file. TaxPayer Defense, Inc. comes to mind - (303) 839-1144. Good luck what ever you decide!
Answer Applies to: Colorado
Replied: 5/12/2015
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
It does not affect your taxes unless one of your creditors gives you a "1099C" for forgiveness of debt. You can over come this with IRS form 982 because there is no "forgiveness of debt" when you are insolvent.
Answer Applies to: California
Replied: 5/12/2015
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
The discharge of debt is not a taxable event.
Answer Applies to: New York
Replied: 5/12/2015
Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
If you file under Chapter 7 or Chapter 13, there should be no effect on your taxes. (Forgiveness of debt outside bankruptcy can sometimes result in taxable incomebut many tax preparers do not fully understand this provision o the law.) A Chapter 11 case creates a new taxable entitybut I do not think this chapter is what you have in mind. Your best bet is to locate an experienced bankruptcy lawyer to advise and represent you: it's almost always worth the investment.
Answer Applies to: Wisconsin
Replied: 5/12/2015
    Patrick W. Currin, Attorney at Law | Patrick Currin
    You can discharge older tax debt in some cases, but not unfiled or recent taxes.
    Answer Applies to: California
    Replied: 5/12/2015
    Ronald K. Nims LLC | Ronald K. Nims
    Unpaid taxes more than 3 years old are discharged and forgiveness of indebtedness is not taxed
    Answer Applies to: Ohio
    Replied: 5/12/2015
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    In certain situations, income tax debt can be discharged, but it has to meet a number of requirements. Without going into a ton of detail, and there are lots of exceptions and caveats to this so you'd want to consult in person with a qualified bankruptcy attorney, but the three general rules are the taxes must be over three years old from the time they became due, the return must have been filed at least two years prior to the bankruptcy filing, and the tax cannot have been assessed within the past 240 days. Again, those are GENERAL rules. You'd want to personally consult with a qualified bankruptcy attorney such as myself before going further with this.
    Answer Applies to: California
    Replied: 5/12/2015
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Usually very little. After all the government makes the rules and changed them at will. They can normally collect the taxes you owe them, and collect the new ones.
    Answer Applies to: Michigan
    Replied: 5/12/2015
    Stephens Gourley & Bywater | David A. Stephens
    Generally filing a chapter 7 does not affect your tax debts, unless a return was filed at least three years before the filing of the chapter 7. You can repay tax debts in a chapter 13.
    Answer Applies to: Nevada
    Replied: 5/12/2015
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    It depends. Taxes for which a return was due more than 2 years before the petition is filed and for which a return was actually filed more than two years before may be dischargeable. More recent taxes would not be dischargeable. The rule of thumb is always to file your tax returns on time even if you cannot afford to pay off your tax obligation at that time. That way, the clock for dischargeability starts. The filing of a bankruptcy petition may also enable you to select a different tax year for that period, which may be advantageous for you, but you should consult your tax accountant for more details.
    Answer Applies to: California
    Replied: 5/12/2015
    Danville Law Group | Scott Jordan
    Bankruptcy does not affect your taxes, except that some tax liabilities may be discharged.
    Answer Applies to: California
    Replied: 5/12/2015
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Sure would have helped if you provided more details about what you wanted to know. As a general rule, bankruptcy is not a taxable event, so you don?t pay taxes on the elimination of debt through bankruptcy. Eliminating taxes through bankruptcy is a complicated topic and depends on the type of tax, whether the return was filed on time or not, how long the taxes have been owed, and other factors.
    Answer Applies to: Nevada
    Replied: 5/11/2015
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