If you live in Medina and have found yourself with unmanageable debate, you are not alone. Many people have found themselves struggling to keep up with mortgage payments, credit payments and even monthly utility bills. Another common debt that many people face is back taxes. Whether you did not have enough withholding taken from your paychecks or you had an unexpected source of taxable income, the Internal Revenue Service (IRS) wants their cut.
Fortunately, there are some options available to help you get your debt under control. Bankruptcy, for instance, might be the best route you can take to get your financial situation back on solid footing. However, if you owe taxes, there are few things you should know about how bankruptcy might affect them.
Discharging the tax debt
Whether or not you can discharge any taxes you owe through bankruptcy depends on several factors. It depends on what kind of tax you owe, how long you have owed the tax, whether or not you filed a tax return and what type of bankruptcy you file. If you file for Chapter 7 bankruptcy, you have to meet certain conditions in order to discharge the debt. The debt must be only for income taxes as payroll taxes and taxes arising from fraud do not qualify. Also, you must have filed tax returns for the two preceding years from when you filed for bankruptcy. The tax debt must be at least three years old and the IRS has to have assessed the tax at least 240 days before the time you file for bankruptcy. In addition, you must not have committed tax fraud or tax evasion.
If you file Chapter 7 bankruptcy and the court discharges the debt, you may still have a problem if the IRS has already filed a lien on your property. This means that if you intend to sell the property, you will have to take care of the lien first.
Taxes you cannot discharge
There are some taxes that you cannot discharge through Chapter 7 bankruptcy. For example, if you owe any penalties on taxes that are not eligible for discharge, you will still have to pay these. Also, any taxes you owe on returns you have not filed do not qualify for discharge.
If you owe back taxes, filing bankruptcy might help you discharge some of them. Keep in mind that you will have to meet certain conditions in order to qualify for such a discharge.