Tuesday, November 17, 2009

Eliminate Taxes in Bankruptcy?

There are a lot of complex rules that allow for discharging of taxes owed to the IRS here are some of them:

  • Bankruptcy 3 years after tax return due date or
  • 2 years after late return is filed (whichever is longer)
  • Over 240 days after audit is final:
  • Any appeal extends time
  • Offer and Compromise extends time
  • Must have filed return (no substitute returns)
  • Can only bankrupt against income and non-trust fund portion of employment tax.
  • Employee portions & Sales tax can not be discharged.

Asset (ch. 13) vs. No-Asset (ch. 7) filings

Chapter 7 (No-Asset)

  • Not enough equity & cash flow to pay debt.
  • Limited to $800 cash, $1K Auto & $5K Home

Chapter 13 (Assets and/or Cash)

  • Assets not lost but debt is reorganized and Interest lowered. IRS stops interest and penalties.
  • Limited to 60 months pay back on "excess" cash flow or assets.
Seek the advice of a lawyer for any decisions are made.

Friday, November 6, 2009

First Time Home Buyer Credit Expanded

Quick points on the credit.
  • First time home buyer Credit (have not owned in last 36 months) extended until 4/30/10 and must close by 6/30/10. ($8000)
  • Home buyers who have owned in last 5 out of 8 years can apply for a $6500 credit also has to be closed by 6/30/10.
Also, unemployment extensions for states with 8.5% unemployment or higher. Iowa currently not eligible.

It is now better to wait and put credit on your 2009 return, rather than amend your 2008 as it takes more than 4 months to process.

Call if you have any questions. 515.285.5544