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How to Discharge Taxes in a Taxpayer Bankruptcy

How to Discharge Taxes in a Taxpayer Bankruptcy
"""For some, filing for bankruptcy is the only solution to their financial woes. Contrary to conventional belief, tax debt relief is possible through bankruptcy. This is not always the case, but there are instances where this can occur. Generally, income tax debt is dischargeable in Chapter 13 or Chapter 7 bankruptcy. Obviously, this is something you should discuss with your tax professional before proceeding. The last thing you want is to file for bankruptcy under the impression that it will discharge your tax debt, only to discover otherwise in the near future.

Under Chapter 7, you are permitted to completely discharge dischargeable debts. Chapter 13 provides a repayment plan for certain debts, while the remainder can be discharged. A qualified professional, such as a tax attorney, should be consulted regarding the form of bankruptcy you choose and your motivations for doing so.

So, you're wondering if you can discharge your tax debt through bankruptcy. If you satisfy the following criteria, you may qualify for Chapter 7 bankruptcy:

The deadline for submitting the return occurred more than three years ago.

The assessment is older than 240 days.

The tax return was lodged more than two years ago, also known as the ""two-year rule.""

The tax return was neither fraudulent nor improper.

5. You are not being accused of tax evasion or tax avoidance.

You have income tax arrears or tax debt but no payroll obligations.

Before a bankruptcy can proceed, the previous year's taxes must be settled.

You are unable to pay at least $100 per month or earn less than your state's median income.

Do you satisfy every requirement? If this is the case, Chapter 7 bankruptcy should allow you to discharge your tax debt.

Regarding a Chapter 13 bankruptcy, the following are some, but not all, of the requirements:

4. All tax returns were filed at least four years prior to bankruptcy filing.

2. Taxes are unrelated to a company

Secured debts cannot exceed approximately $1 million, and unsecured debts cannot exceed $337,000.

You can complete credit counseling with a U.S. Government Agency

4. Tax returns were submitted four years prior to the bankruptcy filing.

If you are considering bankruptcy solely to avoid paying your tax debt, you may be making a grave error, as you may not satisfy the requirements. This should not be viewed as a simple way out, but rather as a consequence of a dire financial situation. Remember that filing for bankruptcy will destroy your credit report and score. Therefore, while you may be able to evade paying a portion of your debt, there are severe consequences.

With this information in mind, you should be able to determine if bankruptcy-based tax debt relief is appropriate for you. There are additional methods to reduce the total amount you owe, despite your dire financial situation.

Learn more about income tax bankruptcy, including the complete list of Chapter 7 and Chapter 13 eligibility requirements. Understand your alternatives to bankruptcy, such as IRS tax settlement, which includes such topics as an Offer In Compromise, being declared uncollectible, and a Partial Payment Installment Agreement, among others.""

" - https://www.affordablecebu.com/

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"How to Discharge Taxes in a Taxpayer Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 73 times and generated 0 comments. The article was created on and updated on 02 June 2023.
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