How to Avoid IRS Penalties with Bankruptcy
How to Avoid IRS Penalties with Bankruptcy
When an individual becomes overwhelmed with debt and has an abundance of federal taxes that were not paid and are past due, a way to be relieved from these IRS obligations is to declare bankruptcy. Those who have past due taxes will be hassled by the IRS and receive fees based upon how late their tax filing is. They will become even more unable to pay their federal taxes than they were before this. Filing for bankruptcy is not the only way to free someone from federal tax debt, but it is one of the easiest ways.
What is bankruptcy?
When an individual declares bankruptcy, they are stating that they have become overrun with debt and can no longer pay their bills, and they are also unable to pay them off in the future based upon their current income and amount of savings that they have. There are two different forms of bankruptcy, chapter 7 or chapter 13, chapter 7 being more for individuals who are most likely not going to be able to pay even a portion of their debt off within a period of time.
What are the positives of declaring bankruptcy?
The most common sought out aspect of declaring bankruptcy is a freedom from debt as well as a freedom from debt collectors. When an individual declares bankruptcy, it makes it so that collectors can no longer seek them out and hassle them over their past dues. Declaring bankruptcy in most cases will allow individuals to keep their homes when they could otherwise lose them due to being overwhelmed with bills.
What are the negatives of declaring bankruptcy?
After an individual declares bankruptcy, his or her credit score will take a large hit. This can take quite a while to improve again, but it is likely that those needing to file bankruptcy already have a poor credit score and this allows them to rebuild instead of keeping it in a downward slope. You may lose some of your possessions or properties that are not protected, as well as lose all of existing credit cards to avoid any further debt. Declaring bankruptcy makes it very difficult for individuals to obtain mortgages.
How do you file for bankruptcy?
When an individual decides they have no other choice but to declare bankruptcy, they should get into contact with a lawyer. Jenkins Law Firm is able to confirm whether or not bankruptcy is the best option and will be able to assist individuals with the legal process and how to declare a status of bankruptcy.
Do you still need to file with the IRS after declaring bankruptcy?
Although filing for bankruptcy is a way to get out of the hassle of dealing with collectors, filing taxes with the IRS is still a necessary component to any working person’s life. The yearly tax return forms must still be turned into the IRS if applicable, and according to the IRS website individuals have a four year period after bankruptcy declaration to file all tax forms.
Contact Jenkins Law Firm today for more information on how to avoid IRS penalties.