| Income Taxes. The only thing worse than paying them | | | | 5. You did not willfully evade paying your income tax. |
| is owing them. If you find yourself owing income taxes | | | | So how should you use this information? First, be |
| and you cannot pay them, then you might be | | | | aware of the time periods surrounding your income |
| considering filing for bankruptcy. Typically, most people | | | | tax debt. If you are close to one of the deadlines |
| who owe income tax consider filing for chapter 13 | | | | mentioned above, make sure you file when it is to your |
| bankruptcy. But that is not always the best option. If | | | | advantage. Second, always file your tax return; even if |
| your income tax debt is eligible to be discharged, then | | | | you cannot pay your income taxes. Finally, make sure |
| you should consider filing for chapter 7 bankruptcy. | | | | you have an accurate accounting of your tax situation |
| When you file for bankruptcy, know that your back | | | | before you make any decisions about how to |
| taxes might not be discharged. In other words, after | | | | proceed. You can contact the IRS and get a free tax |
| your bankruptcy is over, you will still owe the back | | | | transcript. |
| taxes. In those circumstances, filing for chapter 7 | | | | But this is not the end of the analysis. In some cases, |
| bankruptcy might not be right for you. But how do you | | | | the IRS, or your state taxing authority, will have placed |
| know if your income tax debt can be discharged? | | | | a lien on your property. By filing for chapter 7, your |
| If you meet the following factors, you can discharge | | | | personal liability will be wiped off the books. In other |
| your past due income tax. The requirements are: | | | | words, the IRS cannot garnish your wages or plunder |
| 1. You filed a tax return for the year/years that you | | | | your bank account to pay off your income tax debt. |
| owe back taxes; | | | | But you will have to pay the IRS before you can sell |
| 2. Your back taxes are for a tax return filed at least | | | | your property with a clear title. If the IRS already |
| two years before you file for bankruptcy; | | | | placed a lien on your property, you need to weigh the |
| 3. Your tax return for the back taxes was initially due | | | | advantages and disadvantages of filing for chapter 7 |
| at least three years before you file for bankruptcy; | | | | bankruptcy. If that is the case, consult with a skilled |
| 4. The IRS has not assessed your liability for your | | | | bankruptcy attorney to determine if filing for chapter 7 |
| back taxes within 240 days before you file for | | | | is your best option. |
| bankruptcy; and | | | | |