What Happens to Income Taxes in Chapter 7 Bankruptcy?

Mature Man Satisfied Sitting In Front Of Laptop Daydreaming

A lot of people believe that you cannot discharge income taxes in Chapter 7 bankruptcy, but that is not true. If you meet the right requirements, and get the right help, you could discharge some or even all of your income tax debt.

Can I Discharge Income Taxes in Chapter 7 Bankruptcy?

If you meet the qualifications listed below, you may well be able to say goodbye to your income tax debt.

  • The income taxes you wish to discharge have to be from a tax return that is three years old or older. Including extensions, you may file Chapter 7 bankruptcy exactly three years after the expiration of the tax due date.
  • The taxes must have been assessed by a taxing authority at least 240 days prior to you filing for bankruptcy. You may be able to extend this window if you make an agreement with the taxing authority.
  • You have to have turned in a tax return for the tax debts you wish to discharge at least two years before you file a petition for Chapter 7 bankruptcy. Depending on the court, filing late returns may disqualify you.
  • The tax must be income-based. No other taxes besides income tax may be discharged in Chapter 7 bankruptcy. Both federal and state income taxes are dischargeable.
  • Obviously, you must not have committed fraud or tax evasion. Either act will immediately disqualify you from being able to discharge your income taxes in Chapter 7 bankruptcy.

Discharging income tax can be a complicated undertaking, and you would be well advised to consult an experienced bankruptcy attorney. With the help of a bankruptcy attorney, you may be able to walk away from Chapter 7 bankruptcy completely debt free.

Call or fill out an online form today for a free consultation. The Manalapan bankruptcy lawyers at Garland & Mason, L.L.C. are here to help you achieve financial peace.



Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.