Clark & Washington

Navigating Tax Season with Bankruptcy

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Tax season can affect different people in different ways. For some, tax season is painless because they get a tax refund after filing. For others, it can be very stressful for a number of reasons and situations. When someone expects to get a return on their taxes and then finds they have to pay, it can be even more devastating. However, the most stressful time during tax season occurs for the people who are either in the middle of filing for bankruptcy or are seriously considering it.

Understanding That Taxes Will Not Get In The Way Of Your Financial Freedom

A few years ago, filing your taxes during a bankruptcy was a bit complicated. Before 2011 and 2012, people who wanted to keep their tax refund and continue with their bankruptcy plans had to wait to file bankruptcy until they filed their taxes just so they could keep the refund. It was something that was both confusing and stressful because people needed to meet the filing deadline but sometimes they couldn’t wait longer for this reason. If the deadline came after the bankruptcy was filed, then they had to lose their refund. Today, things are different, and an individual can exempt up to $1,500 of his/her refund so they can keep it, even if they are going through a bankruptcy. This is a major difference from a few years ago and it really allows people the chance to get back on their feet with their tax refund before their bankruptcy.

Everything You Need To Know About When You Can File

The most common question that many people ask is if they can schedule a bankruptcy consultation before they file their taxes. The answer to that question is yes! You do not need to worry about filing your taxes before a free consultation. However, you will need to file your taxes before your 341 hearing which is 30 days from your filing date. Once you have filed for bankruptcy, the trustee will need to ensure that you are in the process of filing your taxes. The right time to file for your taxes is usually right after you file for bankruptcy.

Before filing your bankruptcy, we recommend that all individuals take advantage of a free consultation so you can determine where you are in the process and what the next steps are for your situation. Feel free to contact us with any questions or for more information.

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