Does Bankruptcy Clear Tax Debt?


by Andrea Miller on December 02, 2018  0 Comment

Does Bankruptcy Clear Tax Debt?
If you're struggling with debt you're unable to pay, you may have considered bankruptcy. Bankruptcy removes your responsibility for certain types of unsecured debts. But is filing bankruptcy an effective way to clear your tax debt? Only some types of tax debt will be wiped out if you file, so it's not always in your best interest to do so. Here's what you need to know if you are thinking about bankruptcy but owe money to the IRS. When Can Tax Debt Be Discharged? If you file Chapter 7 bankruptcy, the most common type for individual taxpayers, some or all of your tax debt may be discharged. Discharged means that you are no longer responsible for paying the debt and ...

How Does Chapter 13 Bankruptcy Affect Your Federal Taxes?


by Andrea Miller on November 26, 2018  0 Comment

How Does Chapter 13 Bankruptcy Affect Your Federal Taxes?
If you owe federal taxes and other debts you cannot pay, you may be a candidate for Chapter 13 bankruptcy. If you qualify, the tax court will develop a plan to repay your debt over three to five years based on the amount of money you have available after approved cost-of-living expenses. Tax debts are treated differently by the bankruptcy court depending on whether they are categorized as priority or nonpriority debts. The latter category, which also includes unsecured debts such as credit cards and medical bills, will be discharged after you complete your repayment plan. Priority debts, on the other hand, must be repaid under the plan. What Types of Tax Debts Are Priority Obligations? In most cases, an ...

What Is Cancellation of Debt?


by Andrea Miller on October 17, 2018  0 Comment

Cancellation of debt form refers to IRS Form 1099-C, which will be filed by a creditor that agrees to forgive all or a portion of your debt. Under most circumstances, the amount forgiven must be reported as income for the year in question. What Is Cancellation of Debt? If you can no longer pay your bills, you may be able to negotiate a debt cancellation agreement with your lender. However, because you received and used the loan or credit card amount but did not pay the money back, it is considered free income by the IRS and thus must be taxed as such. When Is Canceled Debt Taxed? Common situations in which you will receive a 1099-C form from the ...

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