2005 taxes

[3131tj]

did I just post a blank? If so, sorry...

I use tax software and am doing them today (of course). I thought that somewhere in the process it asks if you filed for bankruptcy. I am near the end and the question never came up. Does my 2005 bankruptcy influence my 2005 tax return in any way?

thanks!

[SinkingFast]

Nope. Not that I know of.

Any debt discharged in BK is not considered taxable income so no worries there.

If you settled some debt outside of BK, that would be taxable income, and you should have received a 1099 from the Creditor as to the amount.

[3131tj]

I suppose it's a good thing, was just hoping I could somehow deduct some of the the atty fees. What about stuff that I charged for my business (self employed, no employees) on a now defunct card - can I still claim them as expenses? I would assume so since the IRS doesn't really care that I filed - do they?

thanks again!!

[kydiv]

Settlement

Pardon my stupidity, but how is a settlement outside of BK considered income? Why would I get a 1099 for it?

[alh]

If you settled some debt outside of BK, that would be taxable income, and you should have received a 1099 from the Creditor as to the amount.

Actually it MAY be considered taxable income. If you were insolvant at the time the debt was settled for example, it is not taxable income. (can find more info if you do a search on nolo and 1099c)

[SinkingFast]

If the debt is "forgiven" by the Lender, it's cash money you had and used just as if you'd earned the money. Therefore it is tax liable income.

You can avoid taxation by claiming insolvency. But if you research insolvency at the IRS website, you'll find there's lots of criteria and lots of forms that must be filed to prove the insolvency. It's not as simple as it sounds.

Just like making payment arrangements with the IRS for taxes owed. Getting an OIC is quite a process, that comes with an IRS tax lien attached to your property. No Creditor will lend to you as long as you have an IRS tax lien showing on your Credit Report. So, a payment plan with Uncle Sam is a bit of a double whammy for someone coming out of BK. Not only do you have monthly payments, but you can't get new credit to reestablish yourself.

[alh]

For individuals, it's usually not that hard to prove you are insolvent. (I just had to send in the forms)

Another good link is:

http://www.lawhelp.org/documents/12041C11.pdf?stateabbrev=/HI/

[SinkingFast]

For individuals, it's usually not that hard to prove you are insolvent. (I just had to send in the forms)

Another good link is:

http://www.lawhelp.org/documents/120...ateabbrev=/HI/

Just curious, but has the IRS indeed agreed that you were insolvent?? Or are you awaiting their decision??

[alh]

They have not agreed, but it is not even close in my case. Basically no assets and huge debt due to a layoff about three years ago.