Archive for October, 2014

Bankruptcy Tax Season: How Can I Write Off Some or All of My Tax Debts through Advanced Planning?

Our Northern Utah Clients can legally write off Income with careful planning.   The Conditions for “Discharging” (Writing Off) Taxes Income taxes that don’t meet certain conditions at the time your bankruptcy case is filed will not be discharged at the end of that case. Those taxes that do meet those conditions will be discharged. Most of the required conditions involve taking certain action (such as filing the pertinent tax return) and waiting a certain minimum amounts of time to pass after certain events (such as the date when the tax return was actually sent in). The rules of pre-bankruptcy planning…

How to Keep Your Northern Utah Business Operating While Getting Relief From Taxes?

The best solution is an ounce of prevention, but if is too late for that, bankruptcy may give you better terms on, your overdue taxes?  The October 15 extended deadline to file 2013 tax returns has come and gone, but if you owe a lot of back taxes and are operating a business your tax worries have not gone away. If you don’t have tax worries, count your blessings; and take steps to never have to worry about it.  You can put procedures in place to make sure you always pay your withholding taxes and quarterly estimated taxes.  Two tricks…

How Can I Remove a Tax Lien on My Home Removed through Bankruptcy?

The IRS/Utah records a tax lien to make you pay the tax. Bankruptcy can get rid of the lien, sometimes without you paying the tax.  Federal and State Income Tax Liens A tax lien is the government’s forced legal claim against your property, designed to ensure that you pay the tax debt which resulted in the lien.  When the IRS or state record a tax lien against your home—usually at your county’s recording office—you usually cannot sell or refinance your home without paying off the tax. (A tax lien can attach to your other property and possessions, depending on how…

Logan Utah’s October Tax Season : Alternatives to the Innocent Spouse Defense for Joint Taxes Owed by Husband and Wife

In Utah even though your ex-spouse’s bankruptcy filing likely will not help you, your own Chapter 7 or 13 can help.   In our last blog post a couple days ago we said that you’re usually fully liable on an income tax debt if you signed its tax return, even if later you got a divorce decree ordering your ex-spouse to pay it. Then we presented three types of relief from this tax liability that the IRS provides. However, these three types of relief—“innocent spouse,” “separate liability,” and “equitable” relief—are quite limited. To qualify you have to meet some strict standards,…

October Tax Season in Logan Utah: The Innocent Spouse Defense – What If My Ex-Spouse Owes Income Taxes?

The usual rule is that you are liable on jointly filed taxes despite any divorce decree, but the  innocent spouse defense may be available to you under some circumstances.     For Jointly Filed Tax Returns, You Are Generally Fully Liable If you filed joint tax returns, you are both usually liable. Each of you is legally obligated to pay the tax (and all interest and penalties) in full. You may have heard the term: “joint and several liability.” To quote the IRS: “Joint and several liability means that each taxpayer is legally responsible for the entire [tax] liability.” Whatever your spouse…

The Importance of Timing — Filing Tax Returns In Bankruptcy.

Prepare your returns before filing bankruptcy  to get good advice about options.  If you know that you owe a bunch of income taxes, and a lot of other debts, you owe it to yourself to see what bankruptcy can do for you. Look at our last dozen or so blog posts to get an idea of the diverse ways it can help. Today we focus on what to do when you haven’t filed one or more of your tax returns. Ignorance is Not Bliss As you can probably imagine, the bankruptcy laws about income taxes are complicated. Under certain circumstances…

October Filers: What Happens to My IRS & Utah Tax Refund in a Chapter 13 Case

Chapter 13 isn’t as straightforward as Chapter 7 in protecting your refunds. But it’s often more flexible and creative in how it does so.      Previously Received and Spent Tax Refunds From the start you can avoid questions about what happens to your pending tax refund in bankruptcy by simply not having any refunds owed to you at the time your case is filed. Just wait to file bankruptcy until after receiving and appropriately spending the refund. The last three blog posts were about protecting pending tax refunds under Chapter 7 “straight bankruptcy.” In the second of that three-part series we…

October Filers: How tax refunds are handled in a Utah Chapter 7 Bankruptcy–Part 3

Your refund goes to the IRS or Utah if you owe for another tax year.  But once bankruptcy writes off an older tax debt, you can keep future refunds.   In our last two blog post we’ve described three different ways to hang onto your income tax refund in a Chapter 7 bankruptcy: by “exempting” it, by the trustee waiving collection of it, and by first receiving and appropriately spending it before filing bankruptcy. But these all assume that you have a legal right to get the refund in the first place. The Refund As Your Asset A pending tax…

October Filers: How tax refunds are handled in a Utah Chapter 7 Bankruptcy–Part 2

You may be able to keep a refund even if it is not exempt if it’s small or if you wait to file bankruptcy until after spending that refund.     In our last blog post we described why income tax refunds are an issue in a Chapter 7 bankruptcy case, and how to protect a pending refund through exemptions, possibly through a “wildcard” exemption and, in some states, a special earned income tax credit one. Pending Refund A pending tax refund for bankruptcy purposes is one owed to you, and therefore is an asset that needs to be protected, and…

October Filers: How tax refunds are handled in a Utah Chapter 7 Bankruptcy–Part 1

In Utah, tax refunds are part of the bankruptcy estate and there usually isn’t an exemption to cover it.    If you are filing your tax return(s) for the 2013 tax year by the October 15 extended deadline, it’s a little less likely that you have a tax refund coming back to you. People who expect a tax refund tend to file as soon as they can to get that refund into their hands, well before the regular April 15 deadline, and so don’t usually ask for an extension. But there can be all kinds of reasons you are preparing and…