How does filing for Chapter 7 Bankruptcy affect my taxes?

Filing for Chapter 7 bankruptcy in Illinois affects your taxes in several ways. First, if you have debts discharged through this type of bankruptcy, you will not be able to deduct any of those discharged debts from your taxes. This means that any unpaid taxes, debts from medical bills, credit card payments, and other types of debt will not be able to be deducted from your taxes. Second, any debt discharged through Chapter 7 Bankruptcy will not be considered income, meaning any forgiven debt will not count as taxable income. This means that you will not have to pay taxes on the total amount of the debt you have discharged. Finally, any taxes due to the IRS that have not been filed by the time you file for Chapter 7 Bankruptcy will be dischargeable. This is because the IRS will consider them “dischargeable” in the Chapter 7 Bankruptcy. However, you will still be required to pay any taxes that you owe for prior years. Overall, filing for Chapter 7 Bankruptcy in Illinois can affect your taxes in several ways. Unpaid debt will not be able to be deducted, forgiven debt will not be considered taxable income, and any taxes due to the IRS that have not been filed will be dischargeable.

Related FAQs

How does filing for Chapter 7 Bankruptcy affect my taxes?

Related FAQs

Related Blog Posts