Tax Returns and Bankruptcy

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Milwaukee bankruptcy tax refundWith tax season among us, the question of bankruptcy before or after taxes comes up quite often. Many people wonder whether or not their tax refund will affect their filing and, mostly, whether or not they will get to keep their refund.

There are a few factors that influence whether or not you will be able to keep your refund in a Chapter 7 bankruptcy filing – your exemptions, the time you file, and the amount of your refund.

As soon as you file for Chapter 7, essentially all of your assets become property of the bankruptcy – including any tax refunds as of your filing date. In other words, unless your Chapter 7 specifically exempts tax refunds, a trustee can take it and distribute it to creditors.

In order to protect your refund, you’ll have to be able to exempt it. The best way to find out if this is possible is by speaking with a Milwaukee bankruptcy lawyer like Michael Burr of Burr Law Offices prior to filing. By working with Attorney Burr, you will likely be able to be better protected in your case.

If you aren’t able to exempt your refund, the next step would be to look at the timing of your filing. This option will only be viable for those that aren’t rushed and have more flexibility for filing. You simply can wait until after you receive your refund and spend it. Do remember, however, purchasing an asset will still put you at risk for surrendering said purchase after filing. The best way to spend your refund is on living expenses – food, gas, rent, etc.

If you’re considering filing for Chapter 7 bankruptcy, or are having problems paying taxes, contact Milwaukee bankruptcy lawyer Michael Burr. With over 20 years of bankruptcy experience, Attorney Burr will help you have the most successful bankruptcy possible.

Bankruptcy Legal Aid: Discharging Tax Debt with Chapter 7

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In bankruptcy law, Chapter 7 is often referred to as a “liquidation bankruptcy” because it allows consumers to liquidate, or eliminate, almost all outstanding debts. Many people falsely believe that tax debt cannot be discharged when you file, but experienced Milwaukee bankruptcy legal aid from Attorney Burr can actually help most consumers eliminate tax debt by filing for Chapter 7 if they meet these three basic provisions.

The income tax return was due over three years ago

If you owe back taxes to the IRS, you are not alone—thousands of Americans either intentionally or inadvertently short the IRS a total of $290 billion each year. As the IRS becomes increasingly aggressive about pursuing people who owe back taxes, many consumers find themselves overwhelmed by bills. If you are considering filing for Chapter 7, you may be able to eliminate your tax debt as long as the tax return was due more than three years ago.

The income tax return was filed more than two years ago

Was your tax return filed more than two years ago today? If so, you already satisfy this requirement, but some taxpayers never file returns for certain years. In that case, the IRS will file one for you. Unfortunately, a government-filed tax return does not meet this test; each consumer must file his own return at least two years before filing for Chapter 7.

The tax was assessed more than 240 days ago

This rule means that the tax agency must have determined that you owe back taxes more than 240 days ago. If you filed your return and acknowledged that you owed a balance; according to bankruptcy law, your tax debt has been assessed. This rule can be confusing, so be sure to consult an experienced attorney to determine your precise assessment date.

Contact attorney Michael Burr at Burr Law Office today at (877) 891-1638 to get the Milwaukee bankruptcy legal aid you need.  You can also visit our website for more information about our legal services.