Usually you can discharge–write off–an income tax debt by just waiting long enough. Here’s how to discharge a tax debt under Chapter 7.
What does the completion of a successful Chapter 7 “straight bankruptcy” case look like? What happens to your debts?
Bankruptcy DOES discharge–permanently write off–certain income taxes. It’s mostly just a matter of time.
As of January 1, 2016 you can include any taxes you owe for the 2015 tax year in your Chapter 13 payment plan.
With Chapter 13 you may have to pay some part of the taxes that you could just discharge under Chapter 7, but it may be worth it.
During the first months of 2016 your bankruptcy can write off more of your tax debts.
If you owe more than 1 year of income taxes, some may be dischargeable and some may not. What happens if you owe both kinds?
Income tax debts that can’t be written off must be paid, either after a Chapter 7 case or during a Chapter 13 one.
Income tax debts can be written off when meeting certain conditions, mostly by being old enough. Here’s what happens in Chapter 7 and 13.
Bankruptcy does not writes off newer income taxes, but Chapter 7 and Chapter 13 both still have ways of helping.
Chapter 7 gets rid of judgment liens and older income taxes, lets business debtors avoid the “means test” and lets you keep a vehicle loan.
Income taxes can be legally written off in bankruptcy under the right conditions. With careful planning, you can meet those conditions.
Would your small business thrive if you could just get rid of, or at least get better payment terms on, your overdue taxes?
Your ex-spouse’s bankruptcy filing seldom helps you, even if it writes off a joint tax. But your own Chapter 7 or 13 can help you directly.
If you can afford your monthly installment agreement with the IRS/state, it may be an appealing solution. But often not the best one.
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