Life happens! Divorce. Job loss. Serious illness. These are life events that can cause financial hardship and force good honest folks to file for bankruptcy. Those who have struggled with an endless stream of expenses that never end often owe income taxes that just will not let them be.
Taxes are a part of life. This is true after bankruptcy. Before filing your income tax returns when there has been a bankruptcy, it’s important to know things. Many people have either partial or incorrect information whether and how bankruptcy could help.
The following information may help you get a few things straight and find the best choice for you:
Bankruptcy Can Write Off Income Tax Debts
Despite common misperception, income taxes in bankruptcy are dischargeable:
The taxes are three years old, the related return filing date was at least two years ago, any assessment was greater 240 days ago and the taxpayer did not engage in fraud or tax evasion. There are several reasons these time periods extend, so do not rely on the above alone to decide if the taxes are dischargeable.
Which Bankruptcy Should You File? Chapter 7 vs. 13
The differences between these two follows:
- Chapter 7 comes with income and property ownership limitations, it eliminates qualifying and unsecured debts which include tax debt,
- Chapter 13 allows the filer to keep higher valued property by reorganizing debt over a 3 to 5 years, part of the debt gets paid to the creditor. Any remaining debt gets discharged after this time.
Further, Chapter 13 is in the repayment plan, allowing you flexibility in re-paying your past due-taxes in a more extended time.
Timing is everything in life and bankruptcy. Smart pre-bankruptcy planning can increase the sum of income taxes you can discharge when you file your bankruptcy case. The best advice is to wait until more of your taxes are dischargeable to file for bankruptcy. It’s not as easy in praxis as in theory, for these two reasons:
Often you face pressure from other creditors to file for bankruptcy, “whether you are paying creditors to keep them happy or because they are forcing payment by suing and garnishing your paychecks and such.” There is always the possibility of finding out you can’t discharge a tax you were expecting to if you wait too long.
Have questions? Contact Keith Jones.
Keith Jones CPA is trusted and reliable CPA who solves IRS problems from comfort of your home. I help people have a more positive experience with IRS and back taxes by getting tax relief with Offer in Compromise & Installment agreements.
Keith Jones CPA, TheCPATaxProblemSolver
One of the BEST Tax Relief Companies & Tax Professional that Advocates for YOU with Back Tax Filing!
Since 2005 Keith Jones has been the sole partner of Keith Jones CPA TheCPATaxProblemSolver.
His specialization is offering IRS tax debt relief, tax resolution & back tax filing to clients across this great country with an emphasis on clients in North Florida where he was born, raised, educated, and has lived his entire life.
With offices in Jacksonville, St Augustine, and Destin Florida, he provides tax planning, accounting, as well as tax preparation services to both individuals and businesses.
Specializing in payroll tax debt relief he runs a very successful practice area in which he is well versed and experienced.
Keith is a tax professional who has helped thousands of GOOD FOLKS solve their IRS tax problems restoring their financial freedom.
This he takes great pride in taking each case personally restores clients financial freedom, giving them peace of mind, a better night of sleep & often saving marriages keeping families together.
For most Americans, dealing with the IRS can be an incredibly overwhelming & high-pressure situation. It is not something they routinely deal with and do not know how to handle.
Keith is a tax professional who deals with these cases daily.
Keith has found that almost every single person he deals with is NOT a tax cheat or deadbeat, but someone who is not able to pay their tax debt due to a financial hardship, often which happened not of their own accord.
Usually, there is a sickness, tragic situation, job or business loss, or some other unfortunate circumstance leaving them scared and not knowing where to turn.
Keith takes this fear away immediately at sets clients at ease by educating them on tax debt relief programs available.
TheCPATaxProblemSolver understands your burden & strongly believes that being informed is one of the keys to successfully navigating the IRS tax relief programs to a fresh start restoring your financial freedom.
Keith was born and raised in the small coastal town of Port Saint Joe Florida and earned his Bachelor of Business Administration and majored in Accounting at Florida State University’s College of Business. He has been a licensed CPA in Florida since October of 1995.
In college and then while studying for his CPA he worked as an Auditor and as a Senior Tax Specialist with the Florida Department of Revenue.
After passing his CPA exam Keith served as Division Controller for the St. Joe Company where he was recognized nationally for his efforts by being inducted into the AICPA’s Business & Industry Hall of Fame.
Elected as a Regional Vice President by his peers for the Florida Institute of CPAs (FICPA).
Through the years, he has served the Accounting Profession and FICPA in many capacities, including as:
Past President of the Miracle Strip Chapter of FICPA
Past Regional Vice President of FICPA
Member of the Finance Committee for four years
Member of the Board of Governors for twelve years
Chairman of the FSU Accounting Conference where he was Chair of the Year
Trustee and Past Vice President of the FICPA Educational Foundation
Member of several committees
In his spare time, he enjoys the beach, walking, boating, and fishing as well as spending time with family.
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