It's not can...it's have to - A basic, rough primer: BK is always done under Federal Laws, in a Federal Bankrutpcy Court. Basically State makes little difference. (Yes the BK Courts operating in certain areas have certain special exemptions and such, minor in the overall, generally intended to make things adhere to the local laws and customs better). In a personal bankruptcy, YOU go bankrupt. Not a debt, not a loan...not a car...not a this or that. ALL of your assets, of all types, MUST be disclosed and reported in BK, and ALL of your liabilities/debts must be too. No exceptions, no picking and choosing. They are all, always involved in some way. The court will then order each of them in priorities according to the laws. Some things may be exempt from use or discharge (like your personal furntiure and retirement accounts are exempt and child support cannot be discharged) - and the rest may be used. With one to pay the other. (All possible creditors are contacted and asked to say what they are owed....you may be required to even take advertisments out to make sure everyone is notified). Any deal you've done for several years is open to scruitiny and review. The court can reverse them, take them out of the BK, or even have them prosecuted as trying to defraud your creditors. (So, no you can't sell your boat to your brother and then declare BK). Debts secured by an asset (say a car) have first call or right to the money received from that asset. If it isn't enough to pay the debt, the remainder of that sdebt becomes a general or unsecured claim against the BK., and has a chance to payment on that level too (albeit a lower priority than those who have yet to receive anything). The end/remaining amount that can't be satisfied is generally discharged by the court...meaning you no longer owe it. You get a fresh basically debt free start....many of those you owe don't get paid what they had expected and relied on, if anything. There are many other considerations too. BK will severly hurt your ability to get credit for a very long time for example. It is on your credit report for at least 10 years...and employers refer to that too, as do landlords and more. Many do not rust people with bankruptcies in their past, especially in the last few years. Many more things. Not disclosing all items is frequently trie and easily discovered, in which case - as you are swearing under oath to the court you included all info - your case is dismissed, and regularly, fraud charges are pursued. (Courts don't take to being lied to well). The courts, Judges, laws, bankers, all those zillions of attornies, etc, have been through this thousands of times for many, many years. The processes are fairly well worked through and prepared for tricks and games. It is unlikely you would discover one that hasn't been tried a zillion times before! The Cos that claim they can change your record, or make magic happen (either before or after BK), are scams, and getting caught doing something unsavory (intentional or not), other than screwing up your bankruptcy filing, is frequently considered and persued criminally. (Think your financial troubles are bad, try adding in criminal ones). The legal process and system is demanding even for those experienced with it. Many of your creditors will have an attorney to assure they get as much as possible, even groups of lawyers, who specialize only in bankruptcy. Simply you should/better/need to have one too.
Yes.
First you need to figure out if they are your dependents--living with you, you provide more than 50% of their support, and so on. If you can claim the children, you may have some deductions.
Is VA Disability income exempt from bankruptcy income claim?
No
Yes as long he and you meet the qualifications for you claim him as your qualifying child dependent on your income tax return. He would have to file his own income tax return reporting his own income and he would not be able to claim himself for exemption amount on his own income tax return.
No
Yes, if the tax returns were filed when due or at least 3 years before the date of filing the bankruptcy. This is a complex area with a lot of exceptions or requirements to meet. Consult an experienced bankruptcy lawyer. Some income taxes are dischargeable in bankruptcy, such as 1040 tax liabilities, however some will remain with the bankruptcy, for example, 941 payroll tax liabilities and trust fund. The tax code is complicated, taxpayer need a better understanding of tax code and bankruptcy laws to deal with a tax debt.
You do not have to report any income tax refund on any tax forms, it is not income.
Absolutely. The filing of bankruptcy does not alter your obligation to report and file taxes, except perhaps to make it more nessasary. The IRS is a creditor, your return is what will be used to determine how much they have a right to file a claim for. If you do not file, they will either determine your tax....(a bad thing)...and file a claim, or you may not relieve the tax in bankruptcy and be liable in the future. Agreeably, you may have losses, and not have a tax or income to pass to the shareholders...but you would have a loss to pass on.
I don't think you do.
I forgot to claim one of my income when I filed my 2006 income taxes. It is now 2008 and the IRS is slapping me with an interest and penalty charges. Can I file the missed income/W-2 on my next years (2009) income tax?
Unfortunately, you will have to pay your income taxes from 2008, even after your bankruptcy is finalized. Federal law prohibits income tax debt from being discharged, so you will still owe, but you may find that they stop attempting collection until after your bankruptcy case is complete. You may want to ask your bankruptcy lawyer if he has tax experience so that he can act as your tax lawyer in dealing with the IRS to settle the debts you owe them as well.