In these tough economic times, more and more people are struggling to get by. Do you know how filing for bankruptcy relates to your taxes?
Please give me a call before you file. We might be able to analyze your budget and find another way out of trouble.
Debts discharged through bankruptcy are not considered taxable income. If you are an individual debtor who files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, a separate “estate” is created consisting of property that belonged to you before the filing date. This bankruptcy estate is a new taxable entity, completely separate from you as an individual taxpayer. Please note, however, that some tax debts are not dischargeable in a bankruptcy action. For more information, see Publication 908, Bankruptcy Tax Guide.