What would you like to do?
Though no one "wants" to file bankruptcy, your question is valid. An income tax return is usually looked at as a lump sum of money to help get back on one's feet. A down payment for a better car, a vacation for a family, etc. If you file a chapter 7, then no, you will not have your tax refund kept from you, UNLESS you owe back-taxes. Depending on how many years you may have owed taxes, you can also file bankruptcy on those. If you have to file a chapter 13, bankruptcy, then I am not sure. Ask your attorney, and a consultation with a bankruptcy attorney is usually free.
Answer
It is a good idea to check with your lawyer on this question because it may depend on what state you life in when you filed. I live in Pennsylvania and did indeed receive my refund. My sister, however, lived in New Orleans when she filed her taxes and moved back to Pennsylvania shortly thereafter. Within two weeks of receiving her refund, she received a letter from her tax office telling her she had to return the check to be applied to her bankruptcy creditors. She was even given a date that the check had to be returned by.
Answer
A lot of times the Trustee will order you to pay the refund to the courts to be distributed to creditors. I've seen this happen in Chapter 7 cases before.
This Q has been pushed around a lot here...and this is what I've pieced together: It depends...a bit on which circuit court your in and how they feel...and especially how much is involved...(obviously large amounts are wanted for creditors...and it just seems unfair for you to not pay someone your debt, because you didn't have the money, because you had too much withheld or prepaid...when the amount withheld/prepaid is entirely controllable by you! The withheld tax account at the IRS is really nothing more than a savings account to pay for the tax actually determined to be due). The other aspect is when you file for BK compared to when you made your money...If the overpaid tax is for a pre-petition filing period...most trustees want it...but if it really isn't - then you can argue it's post petition and yours. So say it's a refund for the past year and you filed BK in December.....well it was basically all withheld as part of the Jan-Dec period in your tax return...and its part of the BK...but if you filed BK in say March...well not much of it is really from the covered BK period - and much of the overpayment should be given to you. (Of course, things like not making $ or deductions evenly through the year can complicate the calculation).
Sort of makes sense.
This Q has been pushed around a lot here...and this is what I've pieced together: It depends...a bit on which circuit court your in and how they feel...and especially how much is involved...(obviously large amounts are wanted for creditors...and it just seems unfair for you to not pay someone your debt, because you didn't have the money, because you had too much withheld or prepaid...when the amount withheld/prepaid is entirely controllable by you! The withheld tax account at the IRS is really nothing more than a savings account to pay for the tax actually determined to be due). The other aspect is when you file for BK compared to when you made your money...If the overpaid tax is for a pre-petition filing period...most trustees want it...but if it really isn't - then you can argue it's post petition and yours. So say it's a refund for the past year and you filed BK in December.....well it was basically all withheld as part of the Jan-Dec period in your tax return...and its part of the BK...but if you filed BK in say March...well not much of it is really from the covered BK period - and much of the overpayment should be given to you. (Of course, things like not making $ or deductions evenly through the year can complicate the calculation).
Sort of makes sense.
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If you receive a tax refund in January and spend it all and then file bankruptcy in February can the trustees make you pay back the refund?
No. But it could possibly depend on whether or not the BK was accepted. Dependent on how much the refund was and what it was used for. In general, only the assets that you hav…e at the time you file are included, not monies already spent. No, But if you file, next year you will possabily have to pay half of your tax money. Why would I have to pay half of my tax money on next years taxes?
In you are filing chapter 7 in New York can they take your tax refund even if you are putting it all toward paying for school?
This may not be helpful at all, but for what its worth... I have no idea what the exemptions are like in New York, but in Indiana, trustee's couldn't care less what the debto…r intended to do with the refund check. Indiana law says you get to keep $100.00 of cash per debtor, period. Anything above that the trustee will keep and distribute to creditors. It is not an issue of what the debtor had planned for the money, or how bad the debtor needed the money, it is simply math: the law says you keep $100.00 and the trustee gets the rest, and that's the end of the analysis. Assuming New York is like Indiana, I would say the trustee will be unmoved by what your plans are for the refund. But, like I said, I don't practice law in New York so maybe there's some exemption over there that is different that what happens in Indiana. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.
What is the likelihood that a tax refund will be taken by the trustee during a bankruptcy?
Answer Generally it depends on the type of BK when or if it has been discharged, the amount of the refund, and if it is a federal or state bankruptcy filing…. As a rule at least a portion of the refund will be taken by the trustee, more likely the entire amount is subject to relinquishment.
Can you file bankruptcy on back taxes?
Answer NO
If you do not owe the IRS will your refund been taken if you file bankruptcy?
It depends on the courts. I had a friend who went through bankruptcy and was owed a refund from the IRS. The trustee for the bankruptcy ordered her to turn over the refu…nd to the courts to be paid out to creditors. So it could happen, but they cannot actually intercept or offset your refund. They will just order you to pay it to the trustee.
How do you know if the father's tax refund was taken to pay for back child support?
Because they sent me a letter and said so
Can you file bankruptcy on new debt?
Generally nothing with in 90 days of filing, and of course anything you do, even for many years before filing, if done in anticipation of filing, or to give a preference to a …creditor over another, can be challenged. And you understand, you go BK on everything you owe and everything you own...you do not pick and choose. So, you can't just get a loan and file BK on it on the way home...and have that debt discharged and keep everything else.
Can your tax refund be taken to pay unemployment?
The President has signed H.R. 2608, The SSI Extension for Elderly and Disabled Refugees Act, into law. The legislation amends IRC §6402 to allow the IRS to offset an in…dividual's federal income tax overpayment by any amount owed to a State for a "covered unemployment compensation debt." The latter term is defined as a past-due debt (including penalties and interest) for erroneous payment of State unemployment compensation due to fraud which has become final under State law and remains uncollected for not more than 10 years. The offset cannot be made before the IRS applies overpayments to: (i) any other debt that the taxpayer has with the IRS, (ii) past-due child support obligations, or (iii) any past-due legally enforceable debt owed to a federal agency. For an offset to take place, the State address on the Federal return for the taxable year of the overpayment must be in the State that is seeking the offset. States must allow individuals at least 60 days notice to present evidence that all or part of the State tax liability is not legally enforceable, or is due to fraud, before beginning proceedings to collect the debt.
If you file bankruptcy Ch 7 in December 2008 in the state of Florida middle district will your income tax refund for 2008 be taken away?
Very likely...the refund is because you had more money than needed withheld from your paycheck and pu in (essentially) a savings account at the IRS to pay your eventual …liability. This money, earned and saved pre-filing, had you not had it put aside (or had you correctly estimated and completed the W-4 so the right amount was withheld), would have been available to pay the creditors. You know, you could literally have had 100% of your pay withheld....think it makes sense youc could get and keep it after filing BK?
If my debt is only in my name and I file chapter 7 in Georgia would my refund be taken if I file my tax return jointly with my husband?
If you filed a Chapter 7 and it has been discharged your tax refund will not be taken. It will only be taken if you have filed a Chapter 13 and that is entirely up to th…e Trustee.
Does the government have to pay your debt if you file bankruptcy?
Not only does it not have to pay, it will not pay your debts. Debts are not extinguished in bankruptcy. The creditors are prohibited from collecting them, assuming you get a d…ischarge. They still exist in some world of uncollectability.
On unemployment had taxes taken out.with new tax law would i file for a refund?
Yes it is possible that you could receive a refund. For the unemployment benefits that you received last year you should receive a 1099-G from the state showing the total amo…unt received during the year and the amount in excess of 2400 will be entered on line 19 page 1 of the 1040 tax form and added to all of your other worldwide gross income and taxed at your marginal tax rate. You will also receive a withheld income tax credit for the amount was withheld and reported on the 1099-G by entering that amount on the page 2 of the 1040 tax form line 61 Federal income tax withheld and added to any other federal income tax that was withheld from other sources during the year 2009.
Answered
Do you pay taxes on debt discharged in bankruptcy?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve: Qualified principal residence indebtedness: This is …the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners. Bankruptcy: Debts discharged through bankruptcy are not considered taxable income. Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets. Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income. Non-recourse loans: A non-recourse loan is a loan for which the lender's only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
Answered
Will your tax refund be taken to pay back your debt if you file for bankruptcy?
Tax Refunds and Returns There is no specific protection for tax refunds in bankruptcy. As such, the "wild card" exemption* is used to try to protect these funds as much as pos…sible. Further, any portion of your tax refund that pertains to the "earned income credit" is also fully protect and yours to keep. In a Chapter 7 Bankruptcy, you may lose all or part of your tax refund due for the tax year in which you filed your bankruptcy. For example, if you file for bankruptcy in 2009, your Trustee may be entitled to all or part of your 2009 refund, which is due from the tax return that you will be file in 2010. If you file for bankruptcy today, you must provide copies of your tax returns for the years 2008, 2007, 2006, 2005, and you may have to provide a copy of your 2009 tax return when it is filed, to the Trustee. In a Chapter 13 Bankruptcy, you must also provide copies of your tax returns to your Trustee during the term of your Chapter 13 Bankruptcy. You will generally lose tax refunds during the entire term of your Chapter 13, not including any amount that can be protected by the "wild card". ------- * The wildcard exemption is $1,000 per person. It allows you to retain up to $1,000 of assets (cash, accounts, property …) that is not otherwise protected when you file for bankruptcy.
Answered
Can you file bankruptcy to pardon debt for owing back income taxes?
You can discharge income tax debt in bankruptcy only under certain circumstances. The rules are discussed in IRS Publication # 908. I have added a link to the one from 2009, b…ut check with your tax adviser for any updates.
Answered
What debts do you still have to pay after filing bankruptcy?
student loans child support
Answered
Will you get your tax refund if you file for bankruptcy?
Whether you are entitled to your tax refund will depend on what type of Chapter of bankruptcy you are filing and whether the bankruptcy exemptions can be used to protect the t…ax refund. If you are filing for Chapter 7 bankruptcy then you can generally keep the refund if the available state bankruptcy exemptions provide protection for it. If you are in a Chapter 13 bankruptcy you are typically required to turn over the tax refunds during the life of the Chapter 13 case.