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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31737
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Can a bankruptcy help with federal income tax debt in any way?

Customer Question

Can a bankruptcy help with federal income tax debt in any way? Also should a bankruptcy be considered before an judgment is levied or after? Thanks
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 4 years ago.

Kirk Adams : Hi - my name is Kirk and I'm a Bankruptcy litigation attorney. Thanks for using JA! I'll be glad to assist you.
Kirk Adams : You can discharge federal income taxes in Chapter 7 bankruptcy only if all of the following conditions are true:(1) The taxes are income taxes; (2) You did not commit fraud or willful evasion; (3) The debt is at least three years old; (4) You filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy; (5) You pass the "240-day rule" -- the income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. Here's a good link that outlines the above with some additional information:
Kirk Adams : As for filing before or after a judgment, it really makes no legal difference - - -
Kirk Adams : You can discharge the judgment either way.
Customer : Is there a basic debt to income ratio that must be met to file. We have a high income, but significant debts from a failed business
Kirk Adams : Yes, there iis criteria to determine eligibility. If your income is higher than the state median income (which yours likely is if you consider it high), then you have to take the "Means Test" in order to see if you qualify.
Kirk Adams : Here's a good link about how this works:
Kirk Adams : Also, there's a link to an online calculator to help you see if you qualify.