When you file a bankruptcy case, you have to submit the last 4 years of IRS tax returns to the trustee.
Do you save your old returns? If so, good. Experts say to hold on to your tax returns for 10 years. That’s a lot of paper if you don’t scan them in or get digital copies of your returns from your accountant, tax lawyer or tax preparer.
Luckily, if you did not save your copies, the IRS can get these to you.
Good news! You can order the last 4 years of tax returns directly from the IRS. Your trustee will not usually want to see your state tax returns.
The best part about it? IT’S FREE!
First off, tax returns are needed to properly fill out your chapter 7 and chapter 13 bankruptcy petition. Get these to your bankruptcy lawyer before you file your bankruptcy. They will forward these to the trustee in your case.
Next, be sure to list any income tax liability on schedule E of your bankruptcy petition schedules if you owe back taxes. Some income tax is dischargeable in bankruptcy, if you can meet several of the US Bankruptcy code’s loopholes. As always, contact your bankruptcy attorney (hopefully it’s me!) to review the dischargeability rules for income taxes that you may owe. Timing is everything. Thankfully, we have tools to help you determine the best time to file your bankruptcy petition. You must schedule income tax liability if you hope to discharge it.
Furthermore, if you haven’t filed returns, you should discuss this with your lawyer too. Most likely, your bankruptcy attorney will tell you to file your tax returns. Likewise, if you are not required to file for a certain year, your lawyer should prepare an affidavit for you to get notarized. The affidavit states that you are exempt from filing for the tax year.
Finally, I do not practice tax law; I only focus on bankruptcy law. For that reason, be sure to talk with a tax attorney to properly advise you if you have to file a tax return in any given year.