Bankruptcy Online Filing Chapter 7
Filing for taxes after bankruptcy chapter 7.?
I filed chapter 7 bankruptcy on November 16th of 2009. I just went to court on January 11th, 2010. Is there anything special I need to do before I file? I worked a couple jobs last year, 1 for 9 months and the other 3 months, random jobs. I was reading online that some items included in the bankruptcy may be taxable? How is this possible, if the item isn’t owed or if it was a car, taxes weren’t paid but weren’t fully charged, right? I understand on credit cards, if I purchase things they are taxed and the taxes are included on the charges made to the credit card, which I didn’t pay, of course, since I filed bankruptcy.
I don’t really know what to exactly do, will turbo tax do it or do I need to hire a specialist? Thanks!
You still have to file taxes.
The benefit will be that your forgiven debts aren’t taxable as they would be with everyone else because bankruptcy shields you. If any of your debts are taxable, the court will give you the amount.
The formula goes like this:
1–any debts forgiven that exceeded your asset value are tax free forever and ever, amen.
2–any debts forgiven that do NOT exceed your asset value are fully taxable income (If you owed Visa $500 and they cancelled your debt, you have $500 in income.)
3–you’re allowed to use up the amount of this income by applying it against “future tax benefits”, most of which are carryforwards (capital loss cf, net operating loss cf, etc.), and you can reduce the basis of business assets as well, to avoid paying an immediate tax on that.
Bankruptcy Legal Center PC.
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