Owing 2024 Taxes

[HLS]

I filed chapter 13 in october 2024 I need submit 2024 tax returns by 05/01/2025. I owe on my federal taxes. What are my options? Am I allowed to set up a payment plan with the IRS ( my 2023 taxes are in the bankruptcy) or can it be included in the bankruptcy

[justbroke]

The IRS would not enter into a payment agreement while you're in an active bankruptcy. They have flags on your account and will immediately know that you're in an active Chapter 13. If you have an attorney, it is possible that you may be able to add the new IRS tax debt as a "priority" debt and pay that within the bankruptcy. How that would affect your Chapter 13 payment is a complex issue which someone would need to review.

As shown in the IRC Manual section below, they will accept voluntary payments. Whether or not this will affect your ability to make and maintain your Chapter 13 payments is too fact specific.

IRS 5.19.1.5.2.1 (03-19-2021) ... If the taxpayer is calling to request an [Installment Agreement] for post-petition liabilities while in Chapter 13 bankruptcy, advise the taxpayer their [Installment Agreement] for request cannot be processed. Inform the taxpayer that voluntary payments can be made on post-petition periods, however.
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The [Installment Agreement] request is considered non processable. Do not input a TC 971 AC 043. See IRM 5.19.1.6.4.7, Pending IA Criteria.

[Carmella]

The IRS will allow voluntary payments, but as justbroke said they will not make a payment plan. We had post BK filing taxes and honestly we just didn't pay them right away as they were not attempting to collect. However, we did start paying on them because we wanted them paid off before our BK plan was completed.

If you call the IRS they have a BK department that is helpful. You can make payments online, but make sure they are paid correctly. What I learned is since I am married and filing jointly I had to make the payment under my husband's social security number because his name was first on the tax return. I had been making the payments under my name and then the payments were just in limbo. I have no idea where they went because they were not credited to us! But the IRS workers were able to locate them and then switch it over to my husband's social security number!

Everyone I talked to at the IRS was helpful, although I did have a few people who didn't give me the best information while I was trying to figure out why my payments were not credited. One piece of advice if you call do not call just before or just after any holidays because I found less experienced workers who had no one to ask or transfer my call to since they took time off!

If you call the IRS keep a log of who you talked to and what transpired. They will give your their ID number and name when you call. I kept a small notebook and dated all my payments and documented all my calls with date/time/person. Hopefully, you wouldn't have to call too often. I had to because of my misplaced payments!

Also if you wait until your BK is paid off/discharged you can set up a payment plan. There were two options one was payments and the other was to pay the entire amount in a set number of days. I can't remember the length of time. But if you pay in the set number of days the interest is minimal. If you set a payment plan they charge you to set up the plan and it's overall more costly. We did this since we didn't have the entire amount paid off when our BK ended. We were behind for 3 yrs on the post BK taxes including the taxes and I think the taxes we had the plan to pay off were filed just a few months before our discharge which happened earlier than expected.

[HLS]

What my attorneys office told me is that they cannot garnish me while I’m in bankruptcy, But I should attempt to make a payment arrangement or send payments. I am guessing that sense I increased my withholding I will probably have a refund that they would just keep when I file taxes next year. But I’m gonna try to pay a little bit each paycheck. The amount I owe is not too terribly high. It’s only $722.

[Carmella]

What my attorneys office told me is that they cannot garnish me while I’m in bankruptcy, But I should attempt to make a payment arrangement or send payments. I am guessing that sense I increased my withholding I will probably have a refund that they would just keep when I file taxes next year. But I’m gonna try to pay a little bit each paycheck. The amount I owe is not too terribly high. It’s only $722.

That's good. You can go online and make payments it's easy to do.