Does our accountant need to know that we filed CH7?

[Diesel73L]

Our accountant is a family friend and we've managed to get through this process without letting either of our families know that we were forced to file for BK. I know, I know, there is no shame, etc...but that decision is different for each person and for us we feel that it's better that our families not know. Anyway, when we file our taxes for 2012 do we need to let the accountant know? AFAIK the only time the IRS comes into play with BK is when debt is forgiven and taxes are owed as a result.

[HHM]

In general, no, your accountant doesn't "need" to know.

However, if you receive a 1099-C from a lender, you will need to provide that document to the accountant to address (or do your own taxes). Keep in mind, you have to tell the IRS that no taxes are owed. A 1099-C is like a W-2, you get a copy and the IRS gets a copy. So, if you file your taxes and don't address a 1099-C, then there will be a problem as the IRS will simply assume the amount as income and redo your return. So, if you actually receive a 1099-C, then you will need to give it to your accountant to address and you will need to tell him/her that you filed BK because the BK is why you won't owe tax.

The good news is, it is actually rare to get a 1099-C on run of the mill unsecured debts. If you discharged a mortgage debt and surrendered the home, then you will probably get a 1099-C.

[keepsmiling]

Your accountant would be breaching some kind of ethics if they shared this info.
If you do get a 1099, perhaps this year you use another accountant or do them yourself? You can always go back to this guy next year.

[AngelinaCatHub]

You would simply be one of many the accountant deals with. In this economy I'll bet he sees quite a few at tax season. You are right, it would be not ethical to spill privileged info. 'Hub

[frogger]

IMO, while you accountant might not need to know, your accountant probably should know.

[lillymarlene]

IMO, while you accountant might not need to know, your accountant probably should know.

Ditto. When I filed, I wanted my accountant to know in case there was something I missed. As it was, since my Chapter 13 was considered mostly a business bankruptcy, I was able to consider my attorney's fees as a business expense.

[tobee43]

our atty not only knows but we have worked on many things together to help our bk work better for us. i have known the firm "personally" for over 20 years and they know above many how bad things can get or be. it's great to have someone there for you in case any of the 1099 come your way. (although my never saw one in their lives before all this mess happened) not that they didn't know they existed, just there were very few occasions one would see or know what to do with them.