Filing Chapter 7 - No tax returns filed recently

[Acuraboi]

Hello everyone. I plan on filing chapter 7 this week due to my inability to repay about $40k in CC & Medical debt. I have everything all set to go for filing but I haven't fuld tax returns since 2021... Will this be a problem? Can I just efilr my 2023 returns today and use that?

Please what is the best way forward, I need to file asap. 

[GZG]

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@Acuraboi wrote:

Hello everyone. I plan on filing chapter 7 this week due to my inability to repay about $40k in CC & Medical debt. I have everything all set to go for filing but I haven't fuld tax returns since 2021... Will this be a problem? Can I just efilr my 2023 returns today and use that?

Please what is the best way forward, I need to file asap. 

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speaking to your BK attorney or getting a free consult with a BK attorney to let you know if there's any implications for your BK for non-filing, and perhaps a referral to a tax professional of some sort who can sort through what/if you need to file

[Bobby1081]

Hey there, 

You will most likely need to file your taxes. Especially if there is a refund due. In the event of a refund and the amount, the trustee will decide if you can keep it or if it has to be turned over. 

[pizzadude]

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@Acuraboi wrote:

Hello everyone. I plan on filing chapter 7 this week due to my inability to repay about $40k in CC & Medical debt. I have everything all set to go for filing but I haven't fuld tax returns since 2021... Will this be a problem? Can I just efilr my 2023 returns today and use that?

Please what is the best way forward, I need to file asap. 

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Agree that you should file returns for prior years as well as you need to understand how your tax liabilities for those years will affect your BK filing

[Henry66]

From my CH7 experience you will be required to file all of your prior years returns.

To file the back tax returns, you can use Turbo tax or TaxAct and print them, or a tax professional if its complicated. 

The hack: "Using the IRS back channel" - if you are entitled to a refund, avoid losing it - check the box on the tax reurn that you want any refund applied to the next years tax return. You can do this each year and roll any refunds forward over to the next year until you reach the current year (or further in the future) which will be post BK filing. It also avoids other creditors like student loans from grabbing it since the IRS is higher up in priority.  

[Horseshoez]

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@Henry66 wrote:

From my CH7 experience you will be required to file all of your prior years returns.

To file the back tax returns, you can use Turbo tax or TaxAct and print them, or a tax professional if its complicated. 

The hack: "Using the IRS back channel" - if you are entitled to a refund, avoid losing it - check the box on the tax reurn that you want any refund applied to the next years tax return. You can do this each year and roll any refunds forward over to the next year until you reach the current year (or further in the future) which will be post BK filing. It also avoids other creditors like student loans from grabbing it since the IRS is higher up in priority.  

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I wish I'd thought of that during my Chapter 13, one year I ended up with a significant return and my Trustee took all but $1,250. 

Edit: then again, since the Trustee got each of my returns for 5-years, he would probably have seen that slight of hand and demanded the money anyway.

[despritfreya]

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@Henry66 wrote:

The hack: "Using the IRS back channel" - if you are entitled to a refund, avoid losing it - check the box on the tax reurn that you want any refund applied to the next years tax return. You can do this each year and roll any refunds forward over to the next year until you reach the current year (or further in the future) which will be post BK filing. It also avoids other creditors like student loans from grabbing it since the IRS is higher up in priority.  

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This might be ok in a non-bk world. In a bk world (once the case is filed) the refund is an asset regardless of what the debtor does on the tax return.  In the context of a Chapter 7  the trustee has the right to file an amended return to recover a refund improperly assigned to a  subsequent tax year.   In the context of a Chapter 13 the debtor will most likely have to account for the asset by increasing plan yield.  Regardless, BEFORE a debtor takes any action (especially after filing bk) he/she should consult with his/her attorney.

Des.