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Tax Tidbits As Filing Deadline Approaches

By Cathy Moran

file taxes

If you got an extension to file your tax return, and tax filing time has arrived, you may need some moral support and some reliable information to get the job done right and on time.

This site often focuses on taxes, not because we are tax professionals, but because tax troubles are one of the prime reasons people file bankruptcy.  And we are expert at bankruptcy issues.

So we think a lot about staying out of tax trouble, claiming all the tax deductions you are entitled to, and using bankruptcy to escape from taxes you can never really pay.

Let’s tour our treasurehouse of tax tidbits.

Unfiled taxes are a life sentence   Even huge tax bills are dischargeable in bankruptcy long before the IRS statute of limitations, but only if you file an honest return. No return, no end to your tax liability.

Cut out the quarterly tax payments  If your checkbook isn’t up to the number at the bottom line of your tax return, consider ditching the quarterly estimated tax deposits in favor of a monthly payment.  Nothing says you can’t pay tax estimates at the end of every month, just like your other bills.

What you must tell your accountant Debt that is forgiven is treated as taxable income, unless it was discharged in bankruptcy.  If you don’t tell your tax preparer that you filed bankruptcy, your tax bill goes way up.

taxes dischargeable

The time must be right to discharge taxes   The “three year rule” for wiping out taxes starts counting at a counter intuitive point.  File too soon and you blow the opportunity to make the tax non collectible.

Find deductions in your Chapter 13 payments  If your Chapter 13 plan is getting you current on mortgage payments or paying business debts, you may have additional deductible expenses.  And no one sends you a tax form acknowledging the payment.  It’s up to you.

bankruptcy terms

The day after tax day for the self employed  Quarterly tax estimates, filing extensions, and small businesses make for a tax trap for those looking for certainty.  My formula for guesstimating the current year liability, so you don’t get caught short.

keep tax refund

Protect your refund from bankruptcy trustee  If bankruptcy is in your future, make a plan to keep your tax refund.  Otherwise, your creditors may get to spend the refund.

More from the Soapbox

  • Find The Hidden Mortgage Interest Tax Deduction In BankruptcyFind The Hidden Mortgage Interest Tax Deduction In Bankruptcy
  • No House, No Discharge When Chapter 13 Goes Off ScriptNo House, No Discharge When Chapter 13 Goes Off Script
  • Why File Bankruptcy? It’s Your Life ExpectancyWhy File Bankruptcy? It’s Your Life Expectancy
  • Bankruptcy Busts Taxes If The Timing Is RightBankruptcy Busts Taxes If The Timing Is Right
  • Your Right To Credit Reporting After BankruptcyYour Right To Credit Reporting After Bankruptcy

Filed Under: Taxes Tagged With: 2017

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

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