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Discharged Taxes & Future Social Security Retirement Benefits

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    Discharged Taxes & Future Social Security Retirement Benefits

    A question for any of the great legal minds here. I filed a Chapter 7 a couple of years back, and among other debts, income taxes were discharged. Now I am currently on disability, which is one of the reasons I filed BK. Now my question is not as basic as some may think so hear me out.

    When I applied for disability, I was given an amount that the SS representative told me also happens to represent what I will receive when I retire at full retirement benefits at 67. Okay, no problem. I assumed that I would be penalized by Social Security for the years of taxes I had discharged, which also (unfortunately) represented some high paying years. So I assumed that my SS retirement benefits, which are the same as my current disability benefits (all plus cost of living increases, of course) would NOT be reflecting the years for the taxes I had discharged.

    So I called now, just a few minutes ago, to find out where I stand with SS when I do retire at retirement age, and lo and behold, to my surprise, she told me that she was still seeing all my work history, NOT just the years I actually paid taxes, and that from what she knew, I would not be penalized for tax debts that were discharged in BK. I also asked her about offers in compromise, as well as income taxes that fall off after the statute of limitations. She seemed to think that when it comes time to retire, these are tax years I would not be penalized for.

    She did hedge her bet at the end of the conversation, and told me that if I really want a definitive answer, I should talk to a BK or tax lawyer, which I will do. But I wanted to start here first.

    Does anyone here know those discharged taxes will be removed from my Social Security folder, even though technically I am being paid now on disability for them?

    Oh, and one note: I applied for SSDI two years after the discharge, so it wasn't like they didn't know I had gotten rid of some taxes when they calculated my disability benefit. Which, again, she told me today (just as I was told when I applied) that this would be the exact same amount my retirement SS would be based on, plus cost of living increases.

    Thanks all!

    #2
    I have no idea, but I would venture to guess that a.) the Social Security Administration (SSA) keeps all your "earnings" records and this is based on your earnings records, and b.) the discharge of Tax debt with the IRS would not affect your "earnings" records. The SSA maintains online policy manuals and I could only see policies related to the collection of overpayments and the affect of bankruptcy on recouping overpayments.

    This question is likely only to be answered by someone at SSA with knowledge of the affect of bankruptcy on benefit calculations.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

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