If a person files bankruptcy, hopefully it is a once-in-a-lifetime experience. Therefore, the process is often intimidating as people have no previous experience with a personal bankruptcy. Lots of people are not sure how filing their personal income tax returns will change after filing a bankruptcy and what they need to claim and what they do not.
According to IRS Publication 908, Bankruptcy Tax Guide, the Bankruptcy Code requires anyone who files bankruptcy to file all tax returns, or at least file for an extension. If you have already filed bankruptcy, you will also need to file an estate tax return, or Form 1041.
“Taxpayers who have made the filing for a bankruptcy and are still currently in the process usually make the mistake of filing their tax return as they normally would,” says Joshua S. Barger, vice president of tax services for Foundation Financial Group. “This is not the process that should be taken.”
Tax laws differ depending on whether you filed a Chapter 13 or Chapter 7 bankruptcy . If you have filed bankruptcy or are considering doing so, please contact our firm for a free consultation.
Benjamin Brand Services- Chicago bankruptcy attorney .