Are Taxes Dischargeable in Bankruptcy?

Oak Creek Bankruptcy Lawyer Helps You Discharge Tax Debt

Bankruptcy discharges tax debt
Milwaukee bankruptcy lawyer explains discharging tax debt
Clear income tax debt by filing for bankruptcy.

Yes—you are able to discharge certain federal and state income taxes by filing for Chapter 7 or Chapter 13 bankruptcy. Only income taxes can be discharged in bankruptcy.

Qualifications for Discharging Income Tax Debt by Filing for Bankruptcy

  1. The taxes are federal or state income taxes only.
  2. You need to have continuously filed tax returns on time—despite not paying.
  3. Your tax debt must be at least three years old. The tax return must have been originally due at least three years before filing for bankruptcy.
  4. You have not committed tax fraud or evasion.
  5. You pass the 240-day rule: income tax debt must be assessed by the IRS at least 240 days before you file, or must not have been assessed at all.

Discharging Tax Debt with Chapter 7 Bankruptcy

Meet the requirements listed above and you may discharge your income tax debts by filing for Chapter 7 bankruptcy. If you qualify for Chapter 7 bankruptcy, you may eliminate unsecured nonpriority debts such as your credit card debt, debt from medical bills, and payday loan debt, as well.

Read more about what you absolutely have to know before filing for bankruptcy in Milwaukee or other locations in Wisconsin.

Discharging Tax Debt with Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy does not immediately discharge tax debt. First, you must determine if your income tax debt is a priority or nonpriority debt.

Your tax debt is considered nonpriority when it meets the qualifications listed above. Otherwise, it is considered priority and must be paid off over the duration of the 3-5 year repayment period.

You will pay a percentage of your nonpriority tax debt over the course of the repayment period. When you complete the repayment period, the remainder of your nonpriority tax debt is discharged.

Oak Creek Bankruptcy Answers Your Questions about Bankruptcy

Filing for bankruptcy requires meticulous attention to detail and intimate knowledge of bankruptcy law. Attempting to file for bankruptcy by yourself can be frustrating and exhausting without the help of an experienced professional. Steven R. McDonald is the helping hand you need to re-gain control of your financial present and future.

Contact Oak Creek bankruptcy lawyer Steven R. McDonald today for more information on discharging income tax debt.
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