With April 15 fast approaching, one of the most frequent questions I receive from those considering filing bankruptcy is when should they file their tax returns. This is Part 2 of a 2 Part posting on this issue. In Part 2 below, I discuss reason NOT to file taxes as quickly as possible in anticipation of bankruptcy.
Reasons to Hold Off Filing Taxes
- Since taxes are not due until April 15, if you expect to owe taxes, there is no reason to rush the filing due to the bankruptcy.
- The fact is that your 2011 tax returns are not due until April 15. Accordingly, if you file for bankruptcy at any time up to April 15, 2012, you are only required to provide your 2009 and 2010 returns. If your 2009 income was less than your 2011 income, it may be advantageous to hold off on 2011 taxes. However, most Trustees will require a copy of your 2011 return before your discharge will be granted.
- In the event you are unable, for whatever reason to file your taxes on time, please be sure to file for an extension instead of just not filing. As I tell clients all the time, it is not a crime to be unable to afford your taxes, it is a crime to not file a return.
Remember that some taxes are dischargeable. Typical income taxes that are more than 3 years old can be discharged! So, as of April 16, 2012, income taxes due in years 2008 and before, may be dischargeable. It is important in order to discharge taxes that your returns have been filed. If you think you may be able to discharge taxes, file all returns asap and make sure they are up to date! By making sure they are filed, you are giving yourself every opportunity to discharge those old taxes.
There are many important issue in deciding when to file your tax returns in conjunction with bankruptcy. To make sure that you know the implications of filing tax returns and your bankruptcy, make sure to communicate with your bankruptcy attorney. Depending on your situation and which state you file in, your attorney should be able to advise you when the best time is to file your taxes. For a free consultation, call us at (816) 561-1818 today!