Let’s Talk About Bankruptcy And Your Taxes

When it comes to bankruptcy and paying taxes, there are several serious issues that you’ll want to have uppermost in your mind. If you’re filing for bankruptcy, you want to make sure that you’re doing everything humanly possible to save yourself as much trouble, expense, and time as you can.

You should know that any income tax debts may be eligible for a Chapter 7 or Chapter 13 bankruptcy. If you’re willing to file for one of them, there are five ways you can avoid your tax debt. However, keep in mind that in order to get your taxes discharged by filing for bankruptcy, you must meet certain requirements, so make sure you leave no stones unturned before you proceed with the bankruptcy process to eliminate your tax burden.

A Chapter 7 filing will enable you to obtain a complete and total discharged of any and all the debts that are allowable under the law. With Chapter 13 filing, a payment plan must be drawn up so you can pay back at least some of your debts, and the remainder will be discharged. Not all of your tax burden will be discharged if and when you file for bankruptcy. You must meet five requirements in order to get your debt taxes eliminated, and each one is highly essential in achieving your goal. They are:

1. The date the tax return was due had to have been at least 3 years ago.

2. The tax return had to have been filed at least 2 years ago.

3. The tax assessment should be at least 240 days old.

4. The tax return can’t be fraudulent

5. You can’t be found guilty of income tax evasion.

If you’re able to meet each of these stringent requirements, you shouldn’t experience any problems and will most likely get your tax debt discharged. Remember that filing for bankruptcy carries its own consequences — especially on your credit score. But that’s a subject for another article. You shouldn’t file for bankruptcy in an attempt to avoid paying your tax debt, because in the long run, this strategy will cause more harm than good when it comes to the damage it’ll do on your credit report.

File for bankruptcy only as a last resort, after you’ve done a careful examination of every aspect of your situation from top to bottom and from side to side. Only after you’ve done a complete analysis of all the facts in your case, if you still believe you have no other recourse available to you, filing for a Chapter 7 or Chapter 13 bankruptcy may very well be your best chance of rebuilding your life and your future.