When you file for bankruptcy, certain types of taxes may still be owed. For instance, income taxes that are considered priority debts must be addressed. However, there are some scenarios where income taxes can be discharged if specific criteria are met. Generally, for income taxes to be eligible for discharge, the tax return must have been due for at least three years, and the tax return must have been filed at least two years before the bankruptcy filing. Additionally, the assessment of the tax must have occurred at least 240 days prior to the filing.
It’s also important to understand that while personal tax debts might be discharged, other forms of taxes, such as payroll taxes or sales taxes, are typically non-dischargeable. This means you’ll still be responsible for those tax debts even after your bankruptcy case is complete.
If you’re navigating this complex terrain, it’s wise to consult with a tax professional or a bankruptcy attorney who can help clarify your obligations and ensure you know exactly what to expect. Understanding the interplay between bankruptcy and your tax liabilities can empower you to make informed decisions as you work toward a more secure financial future. Remember, the goal of filing for bankruptcy is to provide relief and a chance to rebuild, but that doesn’t mean all financial responsibilities vanish overnight.
