Haven’t filed your taxes yet? Worried about whether you can file bankruptcy if your taxes aren’t done? Here’s what you need to know.
You can file a bankruptcy if your taxes aren’t done. Sort of.
The Bankruptcy Code requires you to provide the bankruptcy trustee a copy of your Federal income tax return for the most recent tax year ending immediately before filing the bankruptcy. So if you file bankruptcy in 2020, you are required to produce your 2019 tax returns. Failure to provide these returns to the trustee will result in the trustee moving to dismiss your case.
If you are able to file your tax returns before filing bankruptcy, you should. This makes everything easier. We typically advise you to not file your bankruptcy until your returns are filed. But what if there’s an emergency? Let’s suppose your house is being sold at a foreclosure sale and you haven’t file your tax returns. Can you file the bankruptcy? Yes, you can, but you’ll need to supply your tax returns within 7 days of your 341 meeting of creditors. That means you’ll have about a month to prepare and file your returns.
What if I’m not required to file tax returns? Can I file bankruptcy?
If you are not required to file tax returns by law, then you do not need to supply tax returns to the trustee. Some trustees will ask for an affidavit stating that you are not required to file tax returns. You may not need to file returns if your only income is from social security, for example.
You should be certain that this is the case, however. Sometimes clients tell us that they’re not required to file tax returns when, in reality, they are required to file returns. This could be a problem.
If you work with a tax professional, you should consult that professional to determine whether you are required to file. If you do not work with a tax professional, good news. Attorney Best is also a tax attorney. We can work with our clients to determine whether you are required to file tax returns. Moreover, if you are required to file, but haven’t done so, we can file them for you! One of the reasons people hire our office to file their bankruptcy is that it’s one stop shopping for bankruptcy and tax. We are even able to perform a tax dischargeability analysis!
What if I haven’t filed my tax returns for multiple years? Can I file bankruptcy?
Yes! We can help you file bankruptcy even if your taxes aren’t done.
Sometimes, when someone owes money to the IRS, they decide not to file the tax return. The next year, they don’t file because they didn’t file the last year. This can repeat year after year until it becomes overwhelming. Where do I start? How do I fix this? What about the penalties?
We prepare delinquent tax returns for our clients all the time. Because we are also tax lawyers, we are able to obtain a tax account transcript as well as a wage & income transcript from the IRS. This tax transcript analysis allows us to determine everything we need to know about your tax situation. We can prepare your returns and advise you on what to do next. Sometimes we’re able to reduce or eliminate tax penalties.
Finally, we’re able to perform a tax dischargeability analysis to let you know what taxes are dischargeable in bankruptcy. If the bankruptcy will not discharge your taxes, we would advise you as to other options such as an Offer in Compromise or Installment Agreement.
We cover delinquent tax returns (and the remedies) in our free book, “The Essential Tax Resolution Survival Guide“.
Contact ARM Lawyers today
Never hesitate to reach out to our office during any part of the process. We can skillfully guide you through everything, step by step. If you’re already a client, great! Call 570-257-4509 if you need us. But, If you aren’t a client, that’s ok too! Call 570-257-4509 for a free bankruptcy consultation today.
We are a debt relief agency. We help people for relief under the U.S. Bankruptcy Code.