QUESTION
How does chapter 7 bankruptcy affect taxes?
Asked on Aug 06th, 2011 on Bankruptcy - Indiana
More details to this question:
I am thinking of filing chapter 7 bankruptcy and was wondering how that affects the end of year tax filing how do you file and what happens?
8 ANSWERS
2 Awards
Ultimately it is fine, but you will need to see an accountant. It is not a difficult issue because any debt discharged in Bankruptcy doesn't create a taxable gain for you. There is a form, 982, that the accountant should fill out and supply with your return.
Answered on Aug 09th, 2011 at 1:21 PM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Filing bankruptcy will not negatively affect filing your taxes. Consult with an accountant.
Answered on Aug 09th, 2011 at 8:42 AM
Bankruptcy Attorney serving Herndon, VA
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Maureen O'Malley
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You're not liable for taxes on discharged debt. If a creditor mistakenly files one, there's one you can send about the Bankruptcy.
Answered on Aug 09th, 2011 at 7:50 AM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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You file the same as any other year.
Answered on Aug 08th, 2011 at 5:08 PM
Glen Edward Ashman
This is why you get a good lawyer. Depending on your finances and potential tax liability or refunds you may want to deliberately file before or after a tax deadline. The wrong choice can be costly - and you could lose a refund, or lose the ability to discharge certain tax liabilities.
Answered on Aug 08th, 2011 at 4:54 PM
2 Awards
A tax refund is not an exempt asset, so if you are anticipating a refund check it may be intercepted by the bankruptcy trustee assigned your case. Filing bankruptcy is not a taxable event, so there would be no tax liability created in filing.
Answered on Aug 08th, 2011 at 4:52 PM
For one, filing bankruptcy does not create the taxable "forgiveness of debt" that other debt settlement agreements create. In many jurisdictions, including Indianapolis Bankruptcy, your tax refund(s), if any, may be in part, or in whole, part of the bankruptcy estate. Each individual's situation is unique.
Answered on Aug 08th, 2011 at 4:39 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Affect is to broad a question to answer. You should ask a more specific question.
Answered on Aug 08th, 2011 at 4:39 PM