Tax Filing AFTER Chapter 7 Discharge

[Tax Researcher]

Hello, I filed a ch 7 on April 7th, 2008 and the case was approved/Discharged by the court on June 24th, 2008.
I kept my house out of bankruptcy as I continued to make payments on time and there was not enough equity to be used for the ch7.

Regarding my income tax filings for the 2008 tax year,
I found this info on the Net:



Further, TAXACT2008 states: By dividing the Tax Year into 2 short tax years, it allows the tax due on the short period return to be a claim against the estate

This explanation is not worded very well so can someone explain this in more detail please?

[magyar123]

"Not worded very well" - that's for sure. Call up the IRS, read all that to them and ask them WTF it means in plain English.

[HHM]

99% of people who file BK do not need to worry about this.

The only time you do a short year associated with filing taxes is if you think you will owe tax and are filing a chapter 13 or will have an Asset Chapter 7 case.

What that is saying is that you still need to file an income tax return. The chapter 7 trustee files an income tax return on behalf of the BK estate assuming there are any tax triggering events. Also, in a chapter 7, your INCOME is not part of the BK estate in a tax sense. The date of filing a chapter 7 is an asset snapshot. You still file your taxes as you normally would.

Don't worry about it.

[Tax Researcher]

That much is true. It was a no-asset Chapter 7 case, and I will not OWE any tax.

[HHM]

That much is true. It was a no-asset Chapter 7 case, and I will not OWE any tax.

Then there is nothing you need to do differently then simply file your tax return as you normally would.

Even if you were an asset case, the choice to file a shortened year tax return is voluntary. The benefit to doing a short year when you both OWE tax and have an ASSET case is that the tax debt becomes priority and is paid by the BK estate.

[Tax Researcher]

Then there is nothing you need to do differently then simply file your tax return as you normally would.

Even if you were an asset case, the choice to file a shortened tax return is voluntary. The benefit to doing a short year when you both OWE tax and have an ASSET case is that the tax debt becomes priority and is paid by the BK estate.

Makes sense now. Thank you !