How To File Taxes After Chapter 13 Bankruptcy

When you're bankrupt, you still need to file tax returns.

Chapter 13 bankruptcy provides debtors with the opportunity to repay some or all of their debts under better terms, and is often the best option for individuals with steady income who must file bankruptcy. Because Chapter 13 can remain open for several years, it's important to understand how it will affect your tax filing during that time.

Instructions

1. Review your previous year's tax return. Most bankruptcy trustees will require that you give them any tax refund that you were entitled to, and most will require a copy of your tax returns to verify your refund amount.

2. Adjust your tax withholdings if necessary. If you received a large refund in the prior year, you should adjust your withholding so that there is as little excess withheld as possible. You are at the mercy of the bankruptcy trustee when it comes to tax refunds. It's likely that some or all of your refund will be taken and applied to your debts, especially if any tax debt was included in the bankruptcy. There are circumstances where you may be able to convince the trustee to allow you to keep some or all of your refund if you can show that it is needed to cover necessary annual expenses, and that those expenses are not already covered in your budget.

3. Gather all relevant tax paperwork, and deliver i tto your tax preparer. Make sure to alert him to your bankruptcy status, and request additional copies of taxes as needed by the trustee.

References

• Lawyers: Chapter 13 Bankruptcy Tax Tool