Tips For Filing Taxes After Bankruptcy Henry Comte Velasquez
People filing for bankruptcy must still pay their taxes. Whether they file for chapter 7, chapter 11 or chapter 13 bankruptcy, tax forms must include both individual returns and bankruptcy estate returns. Here are a few helpful suggestions for bankruptcy filers who want to know how to pay their taxes:
Filers May Need to Ask Their Attorney for Assistance Since most people filing for bankruptcy file via the help of an attorney, their lawyer typically files tax forms for the client’s bankruptcy estate. This estate is created to pay back creditors with nonexempt assets. The person who files for bankruptcy, or the person’s trustee, file the necessary tax forms. Bankruptcy filers neglecting to pay their taxes by the deadline may find that their cases are dismissed.
Bankruptcy Filers Must Pay their Taxes Taxes after filing for bankruptcy are viewed as new debts. Debtors are not permitted to have brand new debts. A debt includes any money owed to the Internal Revenue Service (IRS). Asking a bankruptcy attorney for assistance involves providing the lawyer with previous tax records. Additionally, a client should tell their bankruptcy attorney about any tax refund check.
Chapter 7 Tax Form A person filing for Chapter 7 bankruptcy needs to file an individual Form 1040 tax form. A chapter 7 bankruptcy is not viewed as a debt. However, the trustee still needs to file Form 1041 for the bankruptcy estate.
Chapter 11 Tax Form
Filing for chapter 11 bankruptcy means that the filer controls their assets and does not need a trustee. Instead, the filer is the bankruptcy trustee and files an individual Form 1040 and Form 1041.
Chapter 7 and Chapter 11 Bankruptcy Require Two Tax Forms Although there is a difference as to which person is viewed as the trustee, chapter 7 and chapter 11 bankruptcy filings require submitting Form 1040 and Form 1041. Unfortunately, many people filing for bankruptcy do not know they need to file both tax forms.
Chapter 13 Bankruptcy and Taxes People filing for chapter 13 bankruptcy still need to file Form 1041. The difference is that chapter 13 filers must give all tax returns to their trustee who then furnishes the tax refund to creditors.
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