Any bankruptcy situation will have a major effect on many areas of your finances, and that’s why you need the bankruptcy attorneys at Utah Bankruptcy. Our lawyers will help you with the ins and outs of the process, and make sure you’re treated fairly and impartially throughout.
One of the largest areas that can be impacted by is your taxes. Both in cases of Chapter 7 and Chapter 11 bankruptcy, a personal 1040 tax form will still be part of the equation – in Chapter 7 situations, a trustee will also file an additional 1041 that will be outside your control. In both cases, though, you retain control over your personal 1040. Here are a few filing tips post-bankruptcy.
If you’re considering filing for bankruptcy in a given year and have not yet filed taxes for that year, consider doing so before you file for bankruptcy. The only situation where this won’t be the case is if you’re potentially in line for a substantial refund – more on that in a moment. You also need to let your attorney know whether you’ve filed a return for each of the last three years, and supply them if so.
In addition, filing taxes on time every year is vital. The IRS assesses separate penalties for failure to file and failure to pay, meaning even if you don’t file, they’ll still find out if you owe them money and you’ll still be penalized. Adhering to the mid-April deadline will make everything else flow more smoothly.
You’ll need to keep careful track of how you use any refund money you receive via your tax returns. This will always be something that’s asked by a bankruptcy trustee. Make sure your attorney has all your tax records, which will make this easier.
If you’re considering bankruptcy when you receive a refund, be sure not to pay any bills with that refund money. This will often slow the progress of your case processing, and these delays can be costly in some cases.
For more information on tax-related bankruptcy issues, or to find out about any of our other services, speak to the attorneys at Utah Bankruptcy today.