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Taxes and Bankruptcy

Learn how bankruptcy can help relieve your tax debt and how your tax refund is treated in bankruptcy.

Learn what to look out for if you have tax debts and how to eliminate old tax debts by filing bankruptcy. Plus, learn how to protect your tax refund.

This page is your home base for learning about all things taxes.

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Dealing With Tax Debt In and Out Of Bankruptcy

While bankruptcy isn’t always the best solution, discharging an old tax debt through Chapter 7 bankruptcy or paying it off through a Chapter 13 bankruptcy is possible.

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What Happens to My IRS Tax Debt If I File Bankruptcy in 2021?

The most common of all of debts owed to the IRS is back, or unpaid, income taxes. Chapter 7 bankruptcy is an option if your tax debt meets certain requirements.

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Should I estimate my income if I haven't filed taxes yet?

If you do not have official documents, it is OK to estimate your gross income. If you do not feel comfortable estimating you can look at your most recent pay statement and use it to find your gross (before taxes) income year to date.

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Should file my taxes after my 341 Meeting?

*__It doesn't matter if you file before or after your 341 Meeting.__* The trustee is able to seize any non-exempt money that you were entitled to receive before you filed, and you were entitled to receive this refund (or at least a portion of it) based on what you paid in taxes for the whole year prior to filing.

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Where can I get taxes done for free?

The IRS has free tax help centers available. Type in your [zip code here](https://irs.treasury.gov/freetaxprep/ "zip code here") to find the nearest location. 

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Can I request a tax transcript from the IRS?

Yes. You can order your tax transcript if you do not have it by going to the [IRS website](https://www.irs.gov/individuals/get-transcript "irs website"). 

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Unfiled Tax Returns & Bankruptcy

If you were unemployed and weren't required to file your taxes: yes.  If you were employed and you were supposed to file your taxes but didn't: we can't help you at the moment. Please go file your taxes that you were supposed to file and then come back to us. 

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What Happens to Your Tax Refund in Bankruptcy?

When tax season comes, many individuals filing for bankruptcy expect to receive a tax refund check. So what happens to your tax refund when you file for bankruptcy?

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Should I inform my tax preparer about my bankruptcy case

Yes. If you find out that you are owed a refund there may be special instructions provided by your trustee that you will need to follow regarding your refund check that your tax preparer must know before filing your returns.

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What is a tax return?

It is important to take all the necessary steps to make sure that you have copies of your tax returns or transcripts when you file for bankruptcy. Your tax returns will give the Bankruptcy Court and your Trustee an idea of your financial history. To ensure your bankruptcy case goes smoothly make sure to locate copies of them before filing your bankruptcy case, so you don’t have to rush later.

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Frequently Asked Questions About Bankruptcy and Tax Refunds

It's pretty well-known that tax debts typically can't be discharged in bankruptcy. But what if you're getting a refund? This article answers some of the frequently asked questions about tax refunds and bankruptcy.

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Tax Credits and Bankruptcy

Tax credits reduce the total tax owed by the individual or family claiming the credit. Many low-income families have all or a portion of such a tax credit refunded to them once their tax return is filed and their eligibility to claim the credit confirmed by the Internal Revenue Service. This article will review some of the most commonly used tax credits available to low-income individuals and how these credits are treated in a Chapter 7 bankruptcy.

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Timing Considerations If Student Loan Company Takes Your Tax Refund

There are not many creditors that can withhold, or set off, your tax refund before it ever hits your bank account. The most common instance of this is when the IRS keeps your refund and applies it to a prior year's balance owed. But that's not the only time this can happen. Another reason for the federal government to withhold all or a portion of your tax refund is if you're in default with federal student loans. Since student loans aren't automatically discharged in bankruptcy, this can be a blessing in disguise. However, timing matters, and depending on when your tax refund was taken by the government, you may be better off waiting a bit to file your bankruptcy case.

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Can a Married Person File Taxes Without Their Spouse?

A married couple filing income tax returns can choose to do so married filing jointly or married filing separately. In the past, the primary reason for filing separate tax returns was to shield one spouse from the tax liability of the other spouse. Couples filing separate returns paid much more in income taxes than couples filing joint returns. Today, with tax law changes, there are situations where filing separately can result in a lower combined tax burden.

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IRS Wage Garnishments

If the Internal Revenue Service (IRS) garnishes your wages for unpaid tax debts, you do have options to stop the IRS. There are a few different tax procedures you can use to stop a garnishment. In some cases, it may even be a good idea to file bankruptcy.

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Tax Refund Offset and Timing a Bankruptcy Case

There are several different federal, state, and local government agencies that can intercept your federal tax refund if you owe money to these agencies. This procedure is known as a tax offset. This article will look at which agencies can take your refund and how bankruptcy can help you with tax refund offsets.

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Tax Refunds and Bankruptcy Exemptions

Tax refunds can be used to pay creditors if they're not protected by an exemption. This is an overview of states with no or little protection for tax refunds.

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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.


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