Bankruptcy and How it Affects Your Tax Debt

Spring is in the Air-Time to Clean Up Your Finances
March 25, 2019
money bag with the word taxes - Bankruptcy attorneys Naples

Can Bankruptcy Discharge Tax Debts?

Filing for bankruptcy can be a stressful time in your life. You are often left wondering what you will have left and whether or not all of your debts will be discharged. A major issue that arises when filing for personal bankruptcy Naples is whether or not your tax debt will be forgiven in the bankruptcy process. During this difficult time of your life, contact Florida Bankruptcy for assistance. These Naples bankruptcy lawyers can help you understand your situation and how your debts will or will not be forgiven.

When it comes to tax debts that are in the past, you may be able to file for bankruptcy. It is one of those things that you wish a bankruptcy lawyer Naples could tell you is cut and dried, but it is not. There are certain things that you will have to do to get the opportunity to be forgiven from your tax debts. Usually, individuals will file for Chapter 13 bankruptcy, even though there may be other options that are better. The IRS has set aside a list of things that you have to do with your current taxes under Chapter 13 in order to be forgiven of your past tax debt. The requirements set aside are the following:

  • It is required that you file all required tax returns for tax periods ending within four years of the time you filed for bankruptcy.
  • During the bankruptcy process, you must file your taxes or obtain an extension for any item that is required.
  • You must pay all current taxes when they come due during your bankruptcy case.
  • If you fail to file your returns or pay current taxes while bankruptcy is pending, then your bankruptcy case may be dismissed.

Essentially, if you do not listen to your Naples bankruptcy lawyer about paying your taxes during a pending bankruptcy proceeding, you most likely will have your case dismissed. This means you will have to figure out another way to pay your tax debt and other debt obligations. You may be one of the individuals that is allowed to have your tax debts discharged. If you are one of those people, you will need to know which bankruptcy filing will be the best for you. You should also know some of the hoops you will have to jump through in order to have tax debt discharged.

Which Bankruptcy Chapter Is The Best to File Under if You Want to Discharge Tax Debt?chapter 7 bankruptcy form - Bankruptcy attorneys Naples

The majority of individuals will file under chapter 13 when faced with bankruptcy. However, this is usually not the best option when it comes to having your tax debt discharged. Usually, chapter 7 bankruptcy will be more helpful to you than the others. This still does not guarantee that you will have any of your tax debt discharged.

As a matter of fact, it is not very likely to have tax debt discharged. Usually, individuals will have to either pay their tax debt at the end of bankruptcy under chapter 7 or will have to pay them back in a repayment plan under chapter 13. A Naples bankruptcy lawyer can help you wade through the many decisions you have to face during bankruptcy. If you can have your tax debt discharged, there are a few categories that you will fall under. In order to be eligible under chapter 7 you will have to qualify. To know whether you qualify for your tax debt being discharged contact Florida Bankruptcy now.

Understanding Whether You Qualify for You Tax Debt Being Discharged with the Help of a Bankruptcy Lawyer in Naples

There are certain categories that you will have to fall under to be forgiven of your tax debt. “When You Can Discharge a Tax Debt” has explained all of the requirements to be discharged of your tax debt. All of the following requirements must be met in order to be forgiven of tax debt for federal income tax:

  • The taxes that you want to be discharged have to be income taxes. Taxes that are not income taxes will never be discharged through bankruptcy.
  • The tax debt cannot involve fraud or willful evasion. If you tried to go around paying your taxes by fraud or evasion, you will not be able to seek a discharge during a bankruptcy proceeding.
  • The tax debt that you are seeking to eliminate must be at least three years old. The tax debt must have been due three years before any bankruptcy proceeding.
  • You will have to file a tax return for the debt that you want to have discharged. This has to be done at least two years before filing for your bankruptcy proceeding. Depending on the court you are in, you may or may not be able to have your tax debt discharged if you file your returns too late.
  • Lastly, the tax debt must have been analyzed by the IRS at least 240 days before you send your petition for bankruptcy to the court. On the other hand, if the debt has not been analyzed yet, you can also file the petition. The only trouble you will have is when they have assessed your tax debt and you have not waited the 240 days.

If you do not meet one of these requirements, it will be extremely difficult, if not impossible, to have your tax debt discharged. Personal bankruptcy Naples can be an arduous journey in your life.

How Can a Naples Bankruptcy Lawyer Help You?man with arms crossed - Bankruptcy attorneys Naples

A Naples bankruptcy lawyer can help you in numerous ways when trying to have your tax debt discharged. Petitioning for bankruptcy is a frightening experience. Often, it is the unknown future that causes us the most angst and discouragement. With the help of an experienced attorney, you will be able to have some of the anxiety dissipated. There is something comforting about going to someone that can help you in your situation.

To start, they will be able to help you determine whether or not your situation is ready to file a petition to have your tax debts discharged. This is a crucial first step to help you start your future planning because you will know whether or not you are going to have to pay off your income tax debt. Once it has been determined that you are eligible for your tax debt being discharged, you will be able to proceed with filing your petition for bankruptcy. There are a lot of small details that are involved in a bankruptcy case. You want the case to proceed as smoothly as possible. With the help of an experienced attorney, you will be able to proceed without any stumbling blocks.

Receiving forgiveness for tax debt can be extremely difficult. Using the best bankruptcy attorneys possible is essential to being successful in your bankruptcy proceeding.