New to chapter 13 - tax season question.

[toojerm]

If you're in a 100% plan as you stated, then the trustee does not require your tax refund info. They can't take any more than you owe (plus trustee fees). I am 3 years in on a 100% plan, and haven't heard from lawyer, trustee, or court, just check 13datacenter to make sure the plan is disbursing funds. Your returns are yours as far as the trustee and court go, if there is IRS debt, that is a different story.

[LadyInTheRed]

- I'm assuming from what was written that is up to the creditor(s) whether they want to send me one or not? Is it something I have to have by a certain date and if I don't get one I can just go ahead and file? Thanks again.

The instructions for form 1099c say to file the form in the year the reportable event occurs. But, the language doesn't really seem to indicate a strict deadline. I think most creditors will probably send it in the year of the cancellation or soon after the end of the year. The instructions for 1099c are at http://www.irs.gov/pub/irs-pdf/i1099ac.pdf

The preparer from H&R Block may not have been totally offbase in inquiring as to when a debt was "forgiven" in determining whether or not some additional reporting might be required on an individual's income tax return.

The preparer wouldn't be off base to ask if the OP settled debt before filing BK and then say that would require additional reporting on the return. But, to simply say that filing Chap 13 requires an "in depth return", without first asking that simple question, is offbase, IMO.

Any debts included in the Chapter 13 filing should not be reflected on a 1099C and should be contested with the issuer if a 1099C is actually issued.

I wouldn't bother fighting it if a creditor issues a 1099c for discharged debt. It seems much easier to just attach form 982 to your return than to try to convince a creditor they shouldn't have issued the 1099c.

CA, yes, IRS, no. Federal taxes paid are not deductible on your federal tax return.

And, don't forget that California refund is taxable income on your federal return in the year the refund was paid. Receiving that 1099 from the FTB can be quite a shock if you received a large refund.

[Ifonly]

CA, yes, IRS, no. Federal taxes paid are not deductible on your federal tax return.

[tammygirl1]

I have a twist on this question! We had to file a previous year's tax and received a refund but CA and IRS kept the money to pay down other years arreages. Do we submit the amounts that were kept as paid taxes??? I hadn't even thought about that until today. I will send email to my lawyer as they also specialize in tax issues but thought I would throw it out there.
Thanks!

[chicagoed195]

The preparer from H&R Block may not have been totally offbase in inquiring as to when a debt was "forgiven" in determining whether or not some additional reporting might be required on an individual's income tax return.

In many instances, individuals filing Chapter 13 cases have successfully negotiated a forgiveness of debt from one or two creditors prior to filing under Chapter 13.

In that case, the individual would receive a 1099C that would have to be dealt with on their individual return by filing Form 982.

The individual's specific circumstances would determine if this prefiling forgiveness of debt resulted in taxable income. In most instances, I would hazard a guess that the insolvency exclusion would eliminate any taxable effect, but the Form 982 would still need to be included with the return.

Any debts included in the Chapter 13 filing should not be reflected on a 1099C and should be contested with the issuer if a 1099C is actually issued.

[stlrs]

Thank you Ladyinthered and Ifonly. It sounds like I should look elsewhere to get my taxes done. I got nervous when H and R Block was telling me it could be confusing. One more thing - sorry. The 1099 - I'm assuming from what was written that is up to the creditor(s) whether they want to send me one or not? Is it something I have to have by a certain date and if I don't get one I can just go ahead and file? Thanks again.

[Ifonly]

And please don't use H&R Block....yes, many established CPA's are overpriced and unaffordable but I would think that there are plenty of accountants such as myself who are starting businesses or running small practices. I actually charge LESS than H&R Block.

[Ifonly]

Your tax return should not be affected unless you receive a 1099 (which you really shouldn't - the whole point of BK vs. settlement is to avoid potential tax implications, etc.).

And all individuals are cash-basis taxpayers - meaning that you deduct items for the year in which they were paid, not when they were due. So if the 2009 state income tax remains unpaid, you can not include it in your itemized deductions for 2010. You will take the deduction in 2011 (provided that is when the trustee pays the debt).

[LadyInTheRed]

It's in my BK plan that I keep my returns. I don't need to turn them over to the Trustee.

You may need to send a copy of the filed return to the trustee. If you don't know if the trustee requires you send him/her a copy, check with your attorney.

After rereading your initial post, I want to make sure you understand the terminology. Your tax return is the document you file with the IRS. A tax refund is the money the IRS returns to you if you overpaid your tax. The trustee may not require you to turn over your refund, but may still require you to send a copy of your filed return.

Those who mix the two up risk being slapped by HHM : http://www.bkforum.com/showthread.ph...not-tax-return.

[LadyInTheRed]

So in a nutshell me filing BK really has nothing to do w/ doing my taxes? I basically just do them like I never even filed? Sorry if I'm not understanding. I just don't want to do anything wrong that would give me problems in my BK.

Right. Unless you receive a 1099c, there is nothing you need to do differently when filing your return.

ETA: You may need to send a copy of the filed return to the trustee. If you don't know if the trustee requires you send him/her a copy, check with your attorney.

[stlrs]

So in a nutshell me filing BK really has nothing to do w/ doing my taxes? I basically just do them like I never even filed? Sorry if I'm not understanding. I just don't want to do anything wrong that would give me problems in my BK.

[LadyInTheRed]

So I have another dumb tax question....

We filed Ch 13 back in March and included our 2009 Federal and State taxes (amounts owed). They are listed as priority debts with our TT. The TT has not yet begun to pay either of these yet, but they are next in line and should be paid off this year.

So, when I go to do my taxes, should I enter zero for "prior year taxes paid in 2010"...since they were not yet paid???
And, if so, I'm assuming that when I do my 2011 taxes I will enter the amounts for the 2009 amounts owed (since they will be paid in 2011)...correct???

That is the only thing that I have myself convinced I am confused about.

That makes sense to me. You can't deduct something that hasn't been paid yet even if you have already paid part of it to somebody else who will later pay on your behalf. It seems the same as property taxes that you pay into an impound account. You can only deduct the taxes actually paid to the tax collector, even if you paid more than that to the impound account during the year. Please keep in mind that most of my knowledge of personal income taxes is from preparing my own returns and I am not paying any income taxes in my plan. I am far from an expert.

[sunshineMN]

So I have another dumb tax question....

We filed Ch 13 back in March and included our 2009 Federal and State taxes (amounts owed). They are listed as priority debts with our TT. The TT has not yet begun to pay either of these yet, but they are next in line and should be paid off this year.

So, when I go to do my taxes, should I enter zero for "prior year taxes paid in 2010"...since they were not yet paid???
And, if so, I'm assuming that when I do my 2011 taxes I will enter the amounts for the 2009 amounts owed (since they will be paid in 2011)...correct???

That is the only thing that I have myself convinced I am confused about.

[LadyInTheRed]

There is a possibility you could get a 1099c from one of your creditors, but that doesn't make your return "in depth." You would just attach a form 982 to your return and check a box saying the "cancelled" debt was discharged in bk.

ETA: I use Turbotax to prepare and file my returns. It's really easy and isn't very expensive.

[momofthree]

Don't ever go to H&R block, seriously. They are not full-time CPAs and they overcharge. Find a year-round CPA who specializes in your field (asking co-workers for recommendations is a good start), and I think you'll be pleasantly surprised. None of your debts are being "forgiven." You'll file your taxes as you always have.