Understanding what happens with bankruptcy and tax returns can be challenging. Where does a tax refund figure into bankruptcy? If you owe the IRS large sums of money, can you declare bankruptcy? All of those are questions that need to be answered by a professional who understands tax law. Mallari Tax can help. Here are some things you should know about bankruptcy and tax returns:

  • Tax Refunds Belong to the Estate – If a portion or all of your refund was for income earned before filing for bankruptcy, that portion is part of the bankruptcy estate.
  • Exemptions Can Protect Your Refund – There are certain tax and bankruptcy rules that may allow you to protect your refund.
  • Delay Declaring Bankruptcy – If you delay declaring bankruptcy, you can then use your refund on ordinary expenses.
  • Change Your Tax Withholding – Changing your tax withholding status could mean you won’t get a refund, and you won’t lose it to the estate.

If you are in bankruptcy and need help understanding your taxes or owe the IRS and wonder if declaring bankruptcy can help, contact Mallari Tax. The last thing you want is a levy on your bank account or other drastic measures.  Just give us a call at (833) TAX-PEACE and schedule your appointment.