ANSWERS: 1
  • Filing income taxes after bankruptcy is not much different than filing before bankruptcy. However, many believe a couple of fallacies after they take this action. One is that tax debt will be forgiven; this is untrue unless the debt is at least three years old. The second is that forgiven debt will be taxed. After filing bankruptcy, you may still owe recent taxes and/or may lose any refund you may obtain to creditors.

    Seek Professional Help

    Schedule a visit to a tax help center that is government-run, or call the Internal Revenue Service (IRS) after you have filed for bankruptcy. You need to find out what your tax liability is after bankruptcy. This can take as long as six months to complete, and any taxes you owe may have increased during that period of time. It is important to know the exact amount of money you owe, so that you can proceed further with payment arrangements.

    Payment Schedule

    Arrange a payment schedule with the IRS for current and back taxes owed. If you do not attempt to do this, you may be struck with a tax lien. Unfortunately, this would not be included in your bankruptcy case. The IRS can garnish your wages and seize any valuable property that you own if you do not pay the taxes owed.

    File Current Taxes

    Proceed as normal and file your taxes for the current year. Forms needed to do so can be found in post offices, libraries and any local IRS tax office. Other options at your disposal include e-filing online, using a tax filing service or special software made for filing taxes.

    State Taxes

    File the necessary state taxes after a bankruptcy case, if applicable. The same rules of bankruptcy apply to state taxes as they do federal taxes. You can make payment arrangements to your state Department of Taxation if you owe money. Not paying the state can result in damaged credit and loss of certain benefits such as inability to register a car in your state. Any property you own is also subject to tax liens if state taxes are not paid.

    Source:

    Beware The Tax Man, Even After Bankruptcy: MSN.com

    Bankruptcy and Taxes

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