?- filing tax returns after discharge

[feelnbetter]

Just curious about tax time next year. I am Chapter 7, no asset doing a ride-thru on my home. When I file tax returns for this year will I still be able to deduct the mortgage interest on my itemized tax returns? Or since I don't technically "own" the home anymore is that deduction gone?

Trying to figure out the best way to change my tax withholding for the rest of 2009 and not have a big tax refund that I may have to forward to the trustee.

I am very close to discharge date but these things keep popping into my head and I keep getting more confused! Tried reading the IRS "help" regarding bankruptcy... might as well have been written by martians!!!

Anyone able to help me with this?

[music12]

wow, that's such an interesting question.

it intrigued me so much i went on the irs website myself. there are strange things there, like the trustee is supposed to file the tax return for the bk estate?!? what the ****?

anyway, under the info on mortgages (publication 936), it says that to deduct the interest you have to be "legally liable" for the loan, and that there should be a debtor-creditor relationship with the lender. on its face it seems to exclude you because the loan would be discharged so you are not legally liable and you are not a debtor. however, when they wrote that they seem to have meant that you can't deduct interest payments if you are paying for someone else's home, which is not what you are doing.

it's a tough question. probably need a tax attorney to answer it. or search on this forum first, maybe it came up already?

so, i don't know what the law says. however, the spirit of the law as i understand it would be to allow the deduction in your situation. if it's a grey area, i would claim the deduction.