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Quick Guide to Taxes and Bankruptcy

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Quick Guide to Taxes and Bankruptcy

Quick Guide to Taxes and Bankruptcy

Bankruptcy is a legal procedure that gets rid of debts. However, filing for bankruptcy does not eliminate state taxes owed.

If you are considering filing for bankruptcy, it is important to talk to an attorney first to avoid any legal mistakes.

One of the most common questions is whether or not filing for bankruptcy will eliminate taxes owed. The answer depends on the type of taxes you owe and where you live, but it may be possible to have some or all taxes forgiven with certain arrangements.

When it comes to bankruptcy and taxes, there are several major issues that you should consider. If you are going to file for bankruptcy, you will want to do everything possible to spare yourself as much difficulty, money, and time as possible.

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Quick Guide to Taxes and Bankruptcy

You should be aware that any income tax debts may be eligible for relief under Chapter 7 or Chapter 13. This is one of five strategies to get out of tax debt if you are willing to file for bankruptcy. However, keep in mind that in order to get your taxes dismissed by filing for bankruptcy, you must meet specific standards, so make sure you complete them before applying for bankruptcy to get out of tax debt.

If you file for Chapter 7, you will be able to get all of your allowed debts forgiven. With Chapter 13, you will be required to enter into a payment plan in order to repay some of your debts, while the remainder will be discharged. Keep in mind that if you file for bankruptcy, not all of your tax liability will be dismissed. To get your taxes taken care of, you must meet five criteria.

These five conditions must be met in order for your tax liability to be dismissed when you apply for bankruptcy. The first point to mention is that the tax return was due at least three years ago. The second requirement is that the tax return be filed at least two years ago. The third criterion is that the tax assessment must be at least 240 days old. The fourth requirement is that the tax return cannot have been falsified. And the fifth is that you are not a member of a tax evasion guild. If you meet all of these requirements, you will almost certainly be able to have your tax liability dismissed when you file for bankruptcy.

Remember that declaring bankruptcy has its own set of effects, particularly for your credit. You should not file for bankruptcy simply to avoid paying your tax bill because it will do far more harm than good in the long run in terms of credit damage. Only file if you have no other choice and have been told that it is your best chance of resuming your life.

Simeon Bala
Author: Simeon Bala

I am a finance market research analyst with over five years of experience. I have a strong interest in personal finance and investment research. I am also a skilled copywriter.