A Bankruptcy Lawyer’s Blog

Taxes and Bankruptcy

If you have recently filed for bankruptcy, do not forget to file your taxes! The only way Al Capone was brought down was because he failed to file his federal taxes, so you can rest assured that if you fail to file, you will get caught. If you filed bankruptcy within the last year, you should strongly consider hiring a professional tax attorney to review your information. A bankruptcy is a red flag for the IRS and can raise your chance of getting audited (which is no fun).

You should also know that if you had debt discharged or cancelled as part of your bankruptcy, it may be considered income by the IRS. Don’t hesitate to reach out to your bankruptcy attorney and your tax preparer and make sure they are both on the same page when it comes to filing your tax forms. If you are an independent contractor and receive 1099′s from companies that you’ve worked for – you should also check to see if a creditor cancelled that debt – it may need to be included as income on your form 1040.

Now if your bankruptcy is caused by the fact that you owe so much bak taxes you will need your bankruptcy attorney and tax preparer to be 100% in alignment. They will both need to get the facts straight and will probably have to have a discussion with the IRS to see if any of your back taxes are dischargeable. Most likely you will end up still owing those back taxes even after bankruptcy – the IRS always wants to get its money.

Know the facts about taxes and bankruptcy – it is a complicated situation and make sure to surround yourself with professionals who know what to do.

If you owe back taxes and are contemplating filing for bankruptcy – consult with a professional. The Bankruptcy Lawyer Directory has lawyers available right now that can help you understand your options.