Will I Lose My Tax Refund If I Declare Chapter 13 Bankruptcy?

by Lynnette Khalfani-Cox, The Money Coach on March 3, 2011

in Bankruptcy


lose money

Question: I owe $1400.00 to the IRS and am making payments. My 2010 tax return is expected to be $1800.00. I understand that taxes owed can be paid in Chapter 13 but if the tax return comes after the Chapter 13 is confirmed will they take just the $1400.00 owed or my whole return?

Answer: The IRS may take your refund to satisfy your debt to them first. This called an “offset”. If your refund goes instead to your Chapter 13 trustee, you will lose flexibility.

The trustee may or may not release a portion or all of the refund, once your case is assessed. If there is no IRS debt plan included in your active Chapter 13 bankruptcy case, you stand a chance of receiving part or all of the refund from the trustee – but the specifics of your situation will have some influence on the decision.

Be sure to seek your attorney’s advice before you take any action.

John Engerman is a CPA based in the Washington D.C Metro area. he is the founder of aRI Financial Solutions, LLC

 


This Article Answered The Following Money Questions:

  • will i lose my tax refund if i file chapter 13 bankruptcy
  • file jointly chapter 13 irs refund
  • can i make payments to the irs during a ch 13
  • If i file ch 13 and the my taxes was included and gets taken out do they have to refund my money
  • in chapter 13 does IRS keep my refund?
  • lose money
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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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