There are countless reasons why hardworking people end up struggling to make ends meet. All it takes is one catastrophic accident to accumulate massive medical bills or one six-month stint of unemployment to rack up serious credit card debt. Despite these kinds of scenarios, though, most people who are struggling financially face hardships on all fronts, which means they have different kinds of debt that they ultimately need to discharge. Although bankruptcy can be a viable way to discharge credit card debt, an IRS tax attorney will tell you that it may not eliminate all of your tax debt. There are, of course, some situations where they can be eliminated, which attorney Brian Kawamoto of Aiea, HI, explains below.

Ask a Tax Attorney: What Kinds of Tax Debt Can You Discharge?

Dischargeable Debt

It is possible to discharge outstanding debt for your federal income tax burden by declaring Chapter 7 bankruptcy. This is essentially the only kind of tax debt that you can eliminate by filing. Although you can technically clear your obligation of paying a prior recorded tax lien through bankruptcy, it is important to keep in mind that this will merely stop wage garnishment. The lien will remain on your property, which means you will have to pay it off if you ever want to sell.

Required Conditions

When it comes to discharging income tax debt, there are several restrictions that you should be aware of. For example, the debt must be at least three years old (including extensions), and you must have actually filed a tax return for it at least two years prior to declaring bankruptcy. There is also an assessment period that must be satisfied so if you are currently being audited your attorney must be notified as it would affect discharging those taxes. There are other tolling periods that must be taken into account, so  it is wise to discuss your case with a tax attorney to determine the best way to proceed.

If you want to discharge your income tax debt, turn to Brian Kawamoto in Aiea, HI. He will assess your situation to determine the most effective way to regain your financial footing. You can learn more about his experience as a bankruptcy lawyer by visiting his website. To schedule an initial consultation with a tax attorney and start on the road to financial health, call (808) 486-6107.