Tax season can bring both stress and excitement depending on your circumstances. The process of gathering the necessary documents and completing your tax return can be very stressful however the anticipation of receiving a tax refund can be very exciting.
For those who are going through the bankruptcy process, there are some things you need to know about bankruptcy and tax returns.
Successful Bankruptcy Discharge Depends on Your Tax Return– When you file for chapter 7 bankruptcy in Chicago, you will be expected to file an individual tax return. If you do not file your return or request an extension by the deadline it can delay your bankruptcy discharge.
Some Tax Debt May Be Discharged – It is a common misconception that tax debt can never be discharged during bankruptcy. However if tax debt is at least three years old and you filed on time and did not commit fraud or tax evasion concerning the tax debt it might be discharged. If you have tax debt you should discuss your options with your Chicago bankruptcy attorney.
You Can Still Receive a Tax Refund – Most debtors assume that their tax will be forfeited to creditors during the bankruptcy process. However, if you wait to file your return after a case is filed, you can still exempt a large portion of the return. Talk to an experienced Chicago bankruptcy attorney before you file and they can advise you on your ability to protect your refund so you do not get it taken away.
The bankruptcy process may change how you file your taxes but the most important thing is to file correctly and on time. Tax day is April 15, 2014 and you want to make sure you are organized and prepared to file your taxes in advance. If you are currently in the bankruptcy process make sure you talk to your Chicago bankruptcy attorney about the tax implications.
Considering bankruptcy? You can schedule a FREE Bankruptcy Consultation today. This no obligation initial consultation will help you decide if bankruptcy is right for you!
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Get The Facts:
Did You Know?
- The IRS receives over 140 million individual tax returns and collects over $950 billion in taxes.
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The average tax refund is $2,953 and over $325 billion in tax refunds is paid out.
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57% of tax returns are done by paid preparers.
.*Facts from the Forbes.com
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