Should I File Bankruptcy Before I File Taxes?
Filing taxes is just about as fun as having a root canal. Unfortunately, every April 15 the IRS expects a return to be filed by every working citizen, and if a payment is due the IRS will expect to receive that by April 15 also. If you are fortunate enough to be owed a refund, it probably doesn’t matter to you when you file your return and in fact you may want to file it as soon as you have all of your documents gathered so you can receive your refund faster. But if you owe or are experiencing other financial difficulties, the timing on when to file taxes can be called into question.
This is especially true if you are considering filing for bankruptcy. When you file for the protection that bankruptcy offers, your financial picture is scrutinized by the bankruptcy trustee. In some instances this means if you are owed a refund, the trustee may try to intercept the funds. So, the timing of your tax filing and bankruptcy may go hand in hand. Here are some more facts about how the two issues commingle:
- The trustee will ask for tax returns to verify income, if you have not yet filed for the year you may be asked to submit copies once you do file.
- If you have filed for the year and received a refund, the trustee will still want to see your return. If you have spent the refund, the trustee may ask what you spent the funds on and if there is anything left.
- If you have not filed, it is not uncommon for an attorney representing the IRS to ask that you provide your return them prior to filing and they will file it on your behalf and keep a copy for themselves.
For most people that receive a tax refund, the money goes to pay bills or home repairs. These are acceptable expenses and it is not likely you will have to repay the bankruptcy court any of this money. But, because your budget is already tight, it is a good idea to have a skilled bankruptcy and debt management professional review your situation before taking any action. Call our office today to find out more about how your tax return might impact the timing of your bankruptcy filing.
For more information about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.