Tax season is here, and if you’ve been considering declaring bankruptcy, you may wonder about the tax implications. Working with an experienced bankruptcy attorney at The Gil Law Firm in Dothan, AL, will help you determine whether you can discharge some of your tax debt or whether you will be liable for a certain amount of tax debt after filing for bankruptcy.
Here the attorneys share some facts you may not know about taxes and Chapter 7 bankruptcy:
- Dischargeable Debt In Chapter 7 Bankruptcy: You need to meet several criteria in order to have debt discharged under Chapter 7 bankruptcy, such as having filed a tax return for at least two years prior to filing bankruptcy, not being guilty of tax evasion or committing tax fraud in the past, and having a tax liability that is at least three years old. Several other conditions apply, which is why it's important to contact an attorney to verify all dischargeable debts.
- Non-Dischargeable Debt In Chapter 7: These include certain types of tax penalties, tax debt from an unfiled tax return, and trust fund or withholding taxes that may have been held from your paycheck. If this describes your situation, you can set up an installment agreement with the IRS or propose an offer to settle the tax debt for a lower amount.
- Handling Federal Tax Liens: If you are planning to sell your property, but the IRS has placed a federal tax lien on it during the bankruptcy process, you will still owe that debt. You will not be able to legally sell the property and obtain a clean title until you find a way to pay that debt in full.
Have questions about your tax liability after bankruptcy? Get in touch with the attorneys at The Gil Law Firm in Dothan, AL, today. Call the lawyers at (334) 673-0100 today to schedule a consultation, or visit the firm's website for more information.