How does filing for Chapter 7 Bankruptcy affect my taxes?

When filing for Chapter 7 Bankruptcy in Virginia, the effects on taxes depend on how the taxes are structured. Creditors that are discharged, meaning the debts are no longer owed, can be deducted from taxes. This could result in a refund if the taxes had already been paid. On the other hand, if the taxes are not dischargeable, meaning they are still owed, then filing for bankruptcy will not affect the taxes. This includes state income taxes, local income taxes, payroll taxes, and federal taxes. The debtor may still be able to receive a refund if the taxes had already been paid before filing for Chapter 7, but must still pay the taxes that were not discharged during the bankruptcy proceedings. In addition, tax debts can be included in the bankruptcy filing, meaning the debtor would no longer owe the taxes to the IRS, but filing for bankruptcy will still result in a tax lien being placed on the debtor’s property. This lien will remain until the debt is paid in full. Overall, it is important to carefully consider the effects of filing for Chapter 7 Bankruptcy on taxes before making the decision to file. If in doubt, consult with an experienced bankruptcy attorney who can help determine how filing for bankruptcy will affect taxes.

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How does filing for Chapter 7 Bankruptcy affect my taxes?

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