What happens with taxes during bankruptcy filing? Need urgent help understanding

Thanks for this explanation! I'm curious - does the type of bankruptcy (Chapter 7 vs 13) make a difference in how taxes are handled? Also, what happens with taxes that come due during the bankruptcy process?

Yes, the type of bankruptcy definitely affects how taxes are handled. In Chapter 7, which is a liquidation, qualifying tax debts can be completely discharged. The rules I mentioned about the 3-year, 2-year, and 240-day timeframes apply here. Any tax debt that doesn't meet these requirements won't be discharged. With taxes that come due during bankruptcy, you're still required to file and pay them as normal. These are considered post-petition taxes and aren't part of your bankruptcy case. Failing to stay current on these can actually jeopardize your bankruptcy, especially in Chapter 13 where you're expected to stay current on all obligations while in your repayment plan.

Did they actually help with the bankruptcy filing itself or just the tax analysis part? I'm trying to understand if I need this service plus a bankruptcy attorney or if they handle everything.

I've heard of transcript analysis before but I'm skeptical about how accurate it is. How detailed was their analysis? Could they actually tell you which specific tax debts would qualify for discharge?

They only handle the tax transcript analysis part, not the bankruptcy filing itself. You'll still need a bankruptcy attorney to handle the actual filing, but having the tax analysis done beforehand makes the process much smoother. My attorney was actually impressed with how thorough the report was and said it saved a lot of time. Their analysis was surprisingly detailed. They broke down each tax year and specified which taxes met all three timing tests for discharge (the 3-year, 2-year, and 240-day rules). They even flagged potential issues that could prevent discharge, like if there was any evidence the IRS might argue for fraud or willful evasion. It helped me set realistic expectations about which debts would go away and which I'd still need to deal with.

Wait, so how does this actually work? Do they just call the IRS for you? I don't understand how they can get through when nobody else can.

Come on, this sounds too good to be true. The IRS wait times are infamous. I refuse to believe some service can magically get you through the phone tree when millions of others can't. Probably just got lucky with timing.

They don't call the IRS for you - they use technology to navigate the IRS phone system and wait on hold, then when they reach a real person, they call you and connect you directly to the agent. It's basically like having someone professional wait on hold for you. I was skeptical too, but it's not about "magic" - it's about technology handling the frustrating hold time so you don't have to. I didn't get lucky with timing - they've consistently delivered this service to thousands of people. The IRS wait times are exactly why this service exists and works so well. When you need specific information about your tax situation before making a major decision like bankruptcy, waiting weeks for an appointment isn't realistic.

I hadn't even thought about state taxes! I'm in California - do you know if their rules are similar to the federal ones for discharge?

California generally follows similar rules to the federal discharge rules for income taxes, but there are some important differences. California has its own timing requirements, and certain types of California tax debts (like sales tax if you had a business) are never dischargeable. The key with California is making sure all required tax returns have been filed with the state before bankruptcy. California can be particularly aggressive with tax collection after bankruptcy if they determine any taxes weren't properly discharged. I'd definitely recommend discussing your specific California tax situation with your bankruptcy attorney, as state-specific issues can sometimes be overlooked.

How did you handle filing taxes after that? Did you have to file separately or could you still file jointly? We're in a similar situation.