Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

If I file chapter 13 year 2011-2012 will that wipe away my

Customer Question
Customer: Hello...if I file chapter...
Customer: Hello...if I file chapter 13 for tax year 2011-2012 will that wipe away my tax liability for those two years? Both Federal and now CA State is claiming I owe money for those years!
JA: Thanks. Can you give me any more details about your issue?
Customer: I was audited in 2014 for Tax year by the Feds and I owe according to them approximately 30K. They through out 100% of my deductions and since then my income has been reduced significantly. In fact I have been unemployed on and off since 2012 but have had some income as an independent contractor. Now the CA state Franchise Tax is trying to collect approximately 13K for those years. I currently plan on sending a 7275 protest letter (form) which is due by next week. I hired an attorney who is negotiating with the IRS on a offer of compromise but have receive little direction on the notice from the State.
JA: OK got it. Last thing — JustAnswer charges a fee (generally around $32) to post your type of question to Tax Experts (you only pay if satisfied). There are a couple customers ahead of you. Are you willing to wait a bit?
Customer: I will authorize a payment of $32 for my questions to be answered!
JA: OK. Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 1 year ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 22 minutes by:
1/12/2016
Tax Professional: Lev, Tax Advisor replied 1 year ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
Verified

If you file for the bankruptcy protection - that woudl not automatically provide a relief from all tax debts.

You must specifically include these debts into your bankruptcy case.

If the income tax debt meets all five of these rules, then the tax debt is discharged in bankruptcy petitions.

-The due date for filing a tax return is at least three years ago.

-The tax return was filed at least two years ago.-The tax assessment is at least 240 days old.

-The tax return was not fraudulent.

-The taxpayer is not guilty of tax evasion.

.

Another issue - when the debt was discharges - any type of debt - it creates so-called COD (cancellation of debt) income - and that income is included into gross taxable income in the year it was discharges.

You should receive form 1099C reporting that amount.

In this case - you may file form 982 to exclude that amount from taxable income.

Ask Your Own Tax Question
Customer reply replied 1 year ago
The state CA has just sent a letter stating I owe the 13K and I can either agree or protest using form 7275. Since the request has just taken place then that I assume hasn't started the clock on the 240 days?
Please clarify...thanks!
Tax Professional: Lev, Tax Advisor replied 1 year ago

Before making such decision - we need to know what exactly income was missed
if they "think" that you owe the 13K - we need to know how that amount was calculated.

can you specify - what year was audited? what exactly income was missed?

Ask Your Own Tax Question
Customer reply replied 1 year ago
The state used the formula and information that the Feds used. I had regular income and a small consulting business in 2011-2012. For those years the IRS auditor in 2014 disallowed 100% of those deductions. At the time I didn't have the money to hire a tax attorney to fight their findings. I did hire in June 2015 a tax attorney to file a offer in compromise with the Feds. They are still reviewing that offer. In mid December the State sent this notice basically mirroring the Fed's assessment. So I can respond to the state with a protest (due by next week) or go along with their request for additional taxes owed. At this point the IRS nor the State has not filed any liens against my home.....I'm hopeful that by filing Ch. 13 now before any liens are filed will help protect that asset. However I believe the longer I wait the greater the chance of either the state or Feds filing a lien. What do you think!
Customer reply replied 1 year ago
Tax Year 2011-2012
Customer reply replied 1 year ago
Disallowed 100% of my small business tax deductions. If I could have done this all over, I would have hired a tax attorney or professional to negotiate....there was NO WAY that all of my tax deductions should have been disallowed! So at this point I'm more concerned with protecting what little equity I have in my home and protecting it from any tax liens!
Customer reply replied 1 year ago
I'm assuming that the document I uploaded will not be published for others to see?
Tax Professional: Lev, Tax Advisor replied 1 year ago

Indeed all information posted is available for general public.

If you have a concern - you need to contact the customer service asking to remove it.
I will review the document and will reply shortly.

Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 1 year ago

So far these tax assessments - federal and state - were assessed AFTER you file for the bankruptcy protection - and therefore these debts were NOT covered and not eliminated.

The issue is that you agreed with federal assessment - specifically if you applied for the offer in compromise with the IRS - you must agree with assessments.

That was a critical point- regardless of your reasons why you choose that course of actions - you agreed and did not appeal the federal assessment.

That automatically resulted increase of your taxable income for both - federal and state tax purposes - and as we see triggered state tax assessment on the same income

At this point - state tax assessment is based on federal tax assessment - and same rules are used to calculate taxable income - thus while these deductions might be valid - you may not claim them for state tax purposes only and not to claim on your federal tax return.

At this point - if you succeed with OIC you filed to the IRS - you will need to take a similar procedure with state taxing authorities.

If that is not possible - you woudl need to set an installment payment plan.

Unfortunately - there is no easy and simple resolution.

Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
30,132 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How to report cancellation of debt on rental property?
I received a 1099-C for my rental property that I held for over 1 year. According to the worksheet provided in IRS Publication 4681 I was insolvent just prior to the debt being canceled. My question i… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
What is a franchise tax. What is franchise tax and it taxed
Is there anything else the Accountant should be aware of?Customer: the home sold was inherented… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
I need to get a copy of my 2015 state and federal tax. I
i need to get a copy of my 2015 state and federal tax … read more
abci168
abci168
Principal
27 satisfied customers
Two questions on federal tax deductibility: 1. We personally
Two questions on federal tax deductibility: 1. We personally paid legal fees for our manufacturer C Corp. The fees were for assistance in preparing a Research & Development tax credit application. Can… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Form 1099-C (2016) Cancellation of Debt Box 7 Fair market
Form 1099-C (2016) Cancellation of Debt Box 7 Fair market value (FMV) of property shows zero. Why zero? The FMV is the most frequent figure on Form 1099-C. The amount in Box 2 is 111,xxx. Box 1 Date o… read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
I filed for federal tax extension and was approved, file
I filed for federal tax extension and was approved, file under married separate, after divorce finalized, in divorce decreed I am to file singe from 2016 forward, so do I have to complete the extensio… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
As an independent contractor (1099) should I form an LLC? Do
As an independent contractor (1099) should I form an LLC? Do I need to? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
717 satisfied customers
I recently filed amended federal tax returns (1040x) for
I recently filed amended federal tax returns (1040x) for 2013 and 2014. I have received a refund for 2014 and am answering some additional questions for 2013. Do I need to file amended tax returns for… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I am getting a 1099c form (cancellation of debt) and I am on
I am getting a 1099c form (cancellation of debt) and I am on Social Security Disability SSDI. Does this mean my social security SSDI becomes taxable? I will have to pay taxes on the 1099c but I am thi… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have an IRS tax lien and making installment payments. I am
I have an IRS tax lien and making installment payments. I am likely to win a lawsuit within the next year. Can IRS attach my settlement? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have 2015 federal tax lien that has been paid. As of July
I have 2015 federal tax lien that has been paid. As of July 1 , it has fallen off my transunion and experian credit reports as if it never happened due to the new credit reporting rules. It is still s… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How do I remove a federal tax lien. I no longer own the
How do I remove a federal tax lien. I no longer own the property. Transferred to spouse in divorce… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have a federal tax lien,filed with,levy,just got divorced,
I have a federal tax lien,filed with,levy,just got divorced, do i have to pay alimony payments. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have a .CA State Tax Lien of $1300. It was an error since
I have a .CA State Tax Lien of $1300. It was an error since I moved out of state and only filed one state instead of two states along with federal. I was told since it is a prior tax year of a few yea… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
285 satisfied customers
I filed my 2016 federal taxes and attached IRS Form 5329 and
I filed my 2016 federal taxes and attached IRS Form 5329 and asked for a waiver on the tax on an RMD. We received the RMD (in 2017) late through no fault of our own but because of the financial compan… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Second opinion] cancelation of debt included on bankruptcy
Second opinion] cancelation of debt included on bankruptcy is taxable ?… read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
IRS Federal Tax and State taxes: I filed IRS Taxes late as
IRS Federal Tax and State taxes: I filed IRS Taxes late as well as State taxes for 2012, 2013 and 2014 late in 202016. I have not received any response. I am concerned as this was more than enough tim… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x