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Tax Refund Assets in Bankruptcy A tax refund is an asset in both Chapter 7 and Chapter 13 bankruptcy. It doesn't matter whether you've already received the return or expect to receive it later in the year. ... As a rule, a tax refund isn't always easy to protect. Most states don't have a specific tax refund exemption.

Refunds and Back Taxes Recent overdue taxes are non-dischargeable; the three year "look back rule" states you can't get rid of IRS debt that is less than three years old in bankruptcy. So, even after the bankruptcy discharge, the IRS may use any refund due to you for repayment of back taxes.

Your Tax Refund is Part of the Bankruptcy Estate In many Chapter 7 cases, there simply are not enough assets or cash to make it worthwhile for the trustee to take those to pay the creditors. Unfortunately, if you are owed a large tax refund, that may be an easy target for the trustee.

If the amount of the refund going to the trustee is large, the trustee will probably keep the bankruptcy estate open even after the debts are discharged until next year's tax refund is received. ... However, in Arizona the earned income tax credit is not considered public assistance.

Usually, you must turn over your tax refund to the Chapter 13 trustee. But there's a way you might be able to keep it. If you receive a tax refund during your Chapter 13 bankruptcy, the trustee assigned to administer the case could require you to turn that money over for payment to your creditors.

A debt collection agency (CA) can seize your tax refunds under the following circumstances: You owe a huge amount on your federal student loans. The Department of Education can request a treasury offset for your student loan debt. You have a tax debt and the IRS can take it for past-due income tax payment.

A tax refund that's based on income you earned before filing will be part of the bankruptcy estate no matter if you receive it before or after the filing date. Tax refunds go to the estate. It's treated like cash or money in a bank account. (See Can I Keep Cash in Chapter 7?)

FILE IRS FORM 982 After Bankruptcy Discharge The correct way to ensure that you do not have to pay taxes on any debt forgiven in bankruptcy, and properly allocate any tax attributes, is to file IRS Form 982 for the tax year in which you received your bankruptcy discharge.

If you receive a tax refund during your Chapter 13 bankruptcy, the trustee assigned to administer the case could require you to turn that money over for payment to your creditors. Fortunately, bankruptcy law allows you to modify your Chapter 13 plan to excuse payment of tax refunds in certain circumstances.

Usually, you must turn over your tax refund to the Chapter 13 trustee. But there's a way you might be able to keep it. If you receive a tax refund during your Chapter 13 bankruptcy, the trustee assigned to administer the case could require you to turn that money over for payment to your creditors.

In Chapter 13, priority unsecured debts must be paid in full with interest. (Learn more about priority claims in Chapter 13 bankruptcy.) Credit card debts are general unsecured debts. ... Some credit card debt is secured.

If you're expecting a tax refund but have concerns about creditors garnishing it, you may be worrying too much. Federal law allows only state and federal government agencies (not individual or private creditors) to take your refund as payment toward a debt.

When you file exempt with your employer for federal tax withholding, you do not make any tax payments during the year. Without paying tax, you do not qualify for a tax refund unless you qualify to claim a refundable tax credit, like the Earned Income Tax Credit.

Certain groups of people who meet specific criteria don't have to pay income taxes. For example, if you're single, under the age of 65, and your yearly income is less than $12,000, or married, under 65, with income less than $24,000, you're exempt from paying taxes. ... (These figures are for 2019 or the 2018 tax year.)

Exemption from withholding tax When filling out a W-4 an employee has the option to claim exempt from federal withholding tax. If you claim exempt, this means no taxes will be taken out of your paycheck during the year to compensate what you may owe to the IRS.