filing taxes after chapter 7

[MrJames]

Hi folks,
I filed BK last year,was discharged on Nov 11th,the trustee does not want my return. my question is do I have to wait for any paper work regarding the bk before I file? my wife and I both recieved our W2 for 2009 so can we go to H&R block and have them file our taxes or should I be waiting on some other papers{I dont know what the papers are caller...1099 maybe?}
we gave our home and truck up in the BK,we have moved out of the home and signed the home over to the bank already and they have also came and took the truck. how does the home and truck factur into my tax returns...or do they? how about the other unpaid debts that where discharged?
and how will filing BK effect my 2009 tax return? I have did a search and got all sorts of answers though all of them just seem to be guesses? will any of my discharged debts be considered capital gain? Im really confused about all of this. or is just as simple as taking my W2s to H&R block and having my taxes done? Id hate to do that and then a week later get some sort of paper in the mail that I should of filed with my taxes. Thanks for any and all help.

[NewDawn]

I'm not totally sure, but I think you might get some 1099s on the discharged debt. Basically, the creditors took a loss and are going to be filing it on their taxes and so will be forwarding to you the amount of the loss (discharged debt) via a 1099, which you would normally be responsible in paying taxes for.

However, there are two situations where you don't pay taxes on losses or forgiven debt. One is if you're insolvent at the time of the forgiveness of debt and two, if the debt is included in a bankruptcy proceeding. I wish I could remember the name of the IRS form. We had to file one because one creditor settled for less than full a few months before we ended up filing. They sent us the 1099 on the forgiven amount and we checked off the insolvent box. We will be getting more 1099s pretty soon on all the discharged debt, I believe.

If I am wrong, someone please correct me. I would assume the home and car would be handled similarly, but I'm sure someone else could chime in here with some good advice. H and R Block should be familiar with this situation. I would wait to get all the 1099s before filing your taxes. Maybe even call the creditors to see if they're going to be sending one and when. Good luck to you.

[NewDawn]

One other thing I wanted to ask. Is your case officially closed? I know you said you were discharged November last year, but have you checked on Pacer to see if your case is actually closed and determined there are no assets to distribute? Make sure that is entered into your record first before filing your taxes. There was another poster that got a letter from their case trustee asking for a portion of their tax return. So to be on the safe side, I would check to see if the trustee entered a "no distribution report" as well as your case being closed.

[MrJames]

I never did check pacer..simply because I afraid of accidently doing something wrong and getting charged for all of it.

[NewDawn]

You get 10.00 worth a year free. If you stay under that amount, you don't have to worry about it. Did you file pro se?

[MrJames]

No I used an attorney.

[MrJames]

I'm not totally sure, but I think you might get some 1099s on the discharged debt. Basically, the creditors took a loss and are going to be filing it on their taxes and so will be forwarding to you the amount of the loss (discharged debt) via a 1099, which you would normally be responsible in paying taxes for.

However, there are two situations where you don't pay taxes on losses or forgiven debt. One is if you're insolvent at the time of the forgiveness of debt and two, if the debt is included in a bankruptcy proceeding. I wish I could remember the name of the IRS form. We had to file one because one creditor settled for less than full a few months before we ended up filing. They sent us the 1099 on the forgiven amount and we checked off the insolvent box. We will be getting more 1099s pretty soon on all the discharged debt, I believe.

If I am wrong, someone please correct me. I would assume the home and car would be handled similarly, but I'm sure someone else could chime in here with some good advice. H and R Block should be familiar with this situation. I would wait to get all the 1099s before filing your taxes. Maybe even call the creditors to see if they're going to be sending one and when. Good luck to you.

I just an email to my attorney..she should be able to tell me if my case has been closed...though I really dont expect to hear anything from her...she hasn tbeen the most helpful of people since our "court" date.
what does insolvent mean? also how do they expect a person to pay the taxes on the debt? I mean I filed bk so obvisously I am broke..and I doubt I will get a big enough tax return to cover it. I had a couple of store cards{3 I think} one chase credit card,mortgage and truck that where discharged.
I could care less if I get a refund this year{would be nice to have but Im not bankin gon it} but I sure as heck dont want to have to pay taxes that I cant afford on debts I no longer have.

[NewDawn]

No, you WON'T have to pay taxes on the discharged debt. There is an IRS form, which for the life of me I can't remember right now, where you check off the box that says that the particular debt was included in the bankruptcy proceeding. That amount will be excluded from your income.

Don't worry. I'm going to have to do the exact same thing. Basically, just a bunch of 1099s to enter where the amount of those debts discharged will be excluded from your taxable income. Did I make sense? Insolvent means, according to the IRS, that you owe more debts than you have in assets. But don't worry about because your debts were included in the bankruptcy filing. That other provision works for people who settle their debts for less than full without a bankruptcy filing.

Don't lose sleep over it. Everything looks like it's working out just like it should. Just tell H and R Block that you have some debts from a bankruptcy and that you're expecting some 1099s from those creditors. They should know what to do.

Hopefully your attorney will tell you that your case is closed. It probably is. Hope 2010 is the beginning of a new chapter in your life.

[NewDawn]

I found this quote from HHM, who is VERY knowledgeable, in another thread. "This is really no big deal. When you do your taxes, File IRS From 982 and check box 1(a) ("discharge of indebtedness in a Title 11 case")."

After reading his post, I did learn that it is possible that creditors might not send 1099s. It depends on how the creditors have their accounting set up. If they do, you now know what form it is you need to file with the IRS to clear up the matter. I hope you can rest easy now.

[newguy79]

If I just filed on unsecured debt(credit cards), is there anything that I'll need to do? My case isn't closed yet. I have my 341 in 2 weeks.

[OhioFiler]

There are no tax implications to debt discharged in bankruptcy. You should not receive any 1099's for such debt discharged.

Why go to H&R Block to file? You can file for free online at several places.

[CCsAreEvil]

There are no tax implications to debt discharged in bankruptcy. You should not receive any 1099's for such debt discharged.

This is what I was thinking. Some posts in this thread are giving conflicting information.

Also, do I even need to "checkbox" or mark anything on my tax documents saying we filed for BK for 2009? Even though I'm doing a ride-thru, I'm still expecting my 1st mortgage company to tell me how much I paid in property/real estate taxes so I can deduct it.

[MrJames]

I found this quote from HHM, who is VERY knowledgeable, in another thread. "This is really no big deal. When you do your taxes, File IRS From 982 and check box 1(a) ("discharge of indebtedness in a Title 11 case")."

After reading his post, I did learn that it is possible that creditors might not send 1099s. It depends on how the creditors have their accounting set up. If they do, you now know what form it is you need to file with the IRS to clear up the matter. I hope you can rest easy now.

Thank you! you have been extremely helpful and I will rest easy for sure now!

[MrJames]

There are no tax implications to debt discharged in bankruptcy. You should not receive any 1099's for such debt discharged.

Why go to H&R Block to file? You can file for free online at several places.

hmm not sure..I have used H&R block for several years..I guess because its simple and less of a hassle on my end?

[NewDawn]

You can view the thread titled "Received 1099-C after discharge." The OP had received a 1099-C from BOA after their discharge. HHM recommended they simply file IRS Form 982 rather than try to get the bank to correct the accounting error.

If you don't get any 1099s and you case is closed, you should be able to file as normal. By the way, your case should close automatically once the discharge order is entered, if your case trustee filed a no distribution of assets report.