Share:

When you’re struggling financially, filing a tax return is probably one of the last things on your mind. Even for those who don’t owe the IRS money, filing a return means examining their financial situation in depth, which can be stressful. However, failing to file could hurt you in the long run. It can also affect eligibility for declaring bankruptcy. Here is what bankruptcy attorneys want you to know about the relationship between filing taxes and discharging debt.

Your Tax Filing History

Ibankruptcy attorneyf you want to declare bankruptcy, you must meet certain eligibility requirements. For example, Chapter 13 bankruptcy requires petitioners to be current on all tax filings. Before the court will approve a proposed payment plan, the trustee must review the petitioner’s tax returns from the prior two years. Since debtors must pay any overdue income tax in full over the course of their payment plan, it is essential to account for them when reorganizing debt.

Your Tax Debt

In most cases, bankruptcy will not discharge tax debts from unfiled or late tax returns. If you cannot cover the income tax burden for a particular year, a bankruptcy attorney may advise you to file a return on time anyway and arrange an installment plan with the IRS, or attempt to discharge the debt later. If you fail to file, though, anything you owe will accrue interest, penalties, and fees, and there will be no escaping this debt when the IRS finally catches up with you. 

 

If you want to learn how your particular tax situation could affect a potential bankruptcy filing, turn to Greg Dunn, Bankruptcy and Debt Relief Attorney in Honolulu, HI. As an Oahu native, this bankruptcy attorney is committed to helping those in his community regain their financial footing. Learn more about his comprehensive legal services by visiting his website. To schedule an initial consultation with this seasoned bankruptcy attorney, call (808) 524-4529. 

tracking