If you’re looking to file chapter 13 bankruptcy, then it’s advisable that you file all your tax returns that are required by law during your chapter 13 case itself. Now, there are certain factors that you should know when you’re thinking of taking steps in this direction. If you happen to file your case at the beginning of the year when your taxes are already due, then you’ve got the option of choosing whether or not you’ll file your returns before or after filing the case. However, fact remains that it’s compulsory for you to file them.
The essential tax returns
Generally the due date to file income tax returns every year is the 15th of April. Now, in case it so happens that you haven’t filed your taxes by April 15th and didn’t receive any extension either, then your tax return will be considered late. Now, say for instance you go ahead and file chapter 13 bankruptcy before April 15th, then there are high chances that your trustee will put it on hold. This is essentially because your taxes are not yet required. Given such a case, you’re obviously required to file your tax returns on time submit a copy of the tax return to your trustee. This should be done as soon as you file your returns.
Be punctual when filing taxes
Remember, unless and until you’ve filed your tax returns, your chapter 13 case isn’t likely to proceed. Now, the question arises what happens if you’re late. In case you’re late, then you’ll have to wait until the date when you meet your creditors to file all the tax returns of the previous 4 tax years. There are high chances of the trustee postponing your hearing, if you haven’t managed to file all the required tax returns. These things obviously go on to prolong your case. Ensure the fact that your case won’t get postponed by filing on time.
It’s your duty to file all your tax returns during the Chapter 13 case. Be sure of the fact that the Internal Revenue Service will surely notify the bankruptcy court if you haven’t filed bankruptcy on time. Remember, in case you get any tax refund, then it’ll be the property of the chapter 13 estate. Moreover, you should submit every refund to your chapter 13 trustee. You can only avoid doing this in case the court excuses a specific tax refund.
Receiving tax refunds prior to the case
Now, if you happen to file your taxes before a Chapter 13 case, then submit your refund to the chapter 13 trustee. There are chances of your being exempt to the funds or showing that you used the money for some other purpose, in case you receive the refund before filing your case.
Keep in mind the above considerations and only then decide whether or not to file tax returns before or after filing chapter 13 bankruptcy.