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Can you claim state taxes in bankruptcies?
FTB California State income tax can be burdensome and may contribute to a debtor’s decision to file for bankruptcy. Fortunately, state income tax is dischargeable in bankruptcy taxes under certain circumstances. First, the bankruptcy must be filed three years from the date the return was due (including extensions).
Can income taxes be discharged in bankruptcy?
Income taxes are the only kind of debt that Chapter 7 is able to discharge. The tax debt must be for federal or state income taxes or taxes on gross receipts. The return was due at least three years ago.
What if I owe taxes during Chapter 13?
If you do happen to owe taxes while in a chapter 13 bankruptcy, the IRS or State that you owe may file a proof of claim. Depending on the amount you owe, the bankruptcy Trustee may need to increase your payments. The amount that the payments would increase depends on how much you owe.
What will I lose in Chapter 7?
A Chapter 7 bankruptcy will generally discharge your unsecured debts, such as credit card debt, medical bills and unsecured personal loans. The court will discharge these debts at the end of the process, generally about four to six months after you start.
Will I lose my income tax refund in Chapter 7?
Any return that results from income earned after filing for bankruptcy is yours to keep. A tax refund that’s based on the income you earned before filing will be part of the bankruptcy estate no matter if you receive it before or after the filing date. Tax refunds go to the estate.
Can federal taxes be discharged in Chapter 13?
In most cases, you cannot discharge (wipe out) tax debts in Chapter 13 bankruptcy. Instead, you repay your tax debts through the life of your Chapter 13 repayment plan, which could last either three or five years.
How does Chapter 13 affect your tax refund?
You’re required to contribute all disposable income to your Chapter 13 plan. If your plan pays less than 100% to creditors, the trustee can keep your tax refund. Your creditors will receive the percentage of your total disposable income, which will include your tax return, that they’re entitled to under your plan.
What is the 2 out of 5 year rule?
The 2-out-of-five-year rule is a rule that states that you must have lived in your home for a minimum of two out of the last five years before the date of sale. You can exclude this amount each time you sell your home, but you can only claim this exclusion once every two years.
What is the lowest payment the IRS will take?
Your minimum payment will be your balance due divided by 72, as with balances between $10,000 and $25,000.