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Posts Tagged ‘Taxes’

Bankruptcy and the FUD Factor

Wednesday, May 11th, 2011

Photo by Public Affairs at Missouri State University

Do you get extremely anxious when you talk or even think about money? Are your bills piled so high that they sometimes spill over? And, when you do open those much feared envelopes, do you just peek at the minimum payment line? Like millions of others, you may be suffering from the FUD Factor, FUD standing for Fear, Uncertainty, and Doubt. Most psychologists will agree that this can lead to financial denial.

Denial is a disorder that plagues many Americans and leaves them avoiding and fearing anything having to do with finances. As one would suspect, the repercussions can be significant. Your bills, creditor calls, and debt will continue to grow. You may be optimistic and think everything will eventually work itself out, but that’s just the denial speaking.

There are various circumstances that could lead to having financial denial. If you were brought up in a background where talking about money was considered inappropriate, you will most likely feel uncomfortable or anxious when speaking later in life about it. On the other hand, those that grew up watching their parents argue over money will probably be fearful of the topic altogether.

Financial denial can lead to devastating outcomes, including divorce and even suicide.  It is crucial that you address the issue before any of these effects occur.  Bankruptcy, Debt Negotiation, and Tax Negotiation can help. That’s what we do. We help clients understand not only their situation, but more importantly, their options. We are here to help our clients find a path toward financial relief and a fresh start. By minimizing and wiping out their debt, most clients are able to focus on getting their disorder controlled and their financial lives in order.

Contest Winners: They “like” our Facebook pages, but they love their new IPads!

Wednesday, April 20th, 2011

Throughout the months of February and March we hosted a contest for our Facebook pages. The participants were simply asked to watch either our bankruptcy or tax services video, fill out the contact form, and like our facebook page. Although all of our contestants won free education on bankruptcy and tax services, there could only be two grand prize winners. Kyle O’Kelly and Beatriz Ramirez both won 16GB Apple Ipads! Congratulations!

Beatriz Ramirez with Doan Law Firm Marketing Director Hank Evers

Kyle O'Kelly with Doan Law Firm Marketing Director Hank Evers

Taxes: Don’t Let the IRS Empty your Pockets

Thursday, April 14th, 2011

It’s that dreadful time of year again: tax season. Those who are brave enough to file are usually rewarded with a sizable refund or, alternatively, a friendly notice informing them of the large amount they owe. If you fail to pay taxes owed to the IRS by the April 18th deadline, you will face large penalties and fines. Instead of avoiding tax season and dodging your income tax owed, let us explain some other options.

Through bankruptcy, you may be able to discharge tax debts. A Chapter 7 bankruptcy permits a full discharge of allowable debts. A Chapter 13 bankruptcy permits a payment plan to repay some debts, including tax debts. Under this Chapter you are able to make tax payments at a 0% interest, in comparison to the usual 3% from the IRS. In order for a tax debt to qualify as being dischargeable in bankruptcy, five criteria must be met:

  1. The due date for filing a tax return is at least three years ago – the debt has to be from a tax return that was due at least three years before the bankruptcy is filed.
  2. The tax return was filed at least two years ago – the tax debt has to be from a filing that happened at least two years before the bankruptcy is filed.
  3. The tax assessment has not been in the last 240 days- the debt has to be assessed by the IRS at least 240 days before the bankruptcy is filed
  4. The tax return was not fraudulent- the tax return cannot be fraudulent or frivolous.
  5. The taxpayer is not guilty of tax evasion – the taxpayer cannot be guilty of intentionally evading any tax laws

Analyzing your bankruptcy tax debt is very tricky and should be correctly determined from a bankruptcy expert. Call the Doan Law Firm for a free consultation.

Another exciting installment of Ask Doan Law Firm

Tuesday, June 22nd, 2010

What happens to income taxes in bankruptcy?

Generally, taxes for income can be discharged, i.e., the debt will be erased, if the tax returns were filed on time and three years have passed.  Other tests also apply.

Even if your taxes are not dischargeable, in a Los Angeles Chapter 13 you can pay back taxes over a 3-5 year period.  One of the benefits of paying taxes in a Chapter 13 plan is that fines and penalties stop accruing.

Back Taxes Meet a Chapter 13 Plan

Monday, June 7th, 2010

In the context of a Los Angeles Chapter 13 bankruptcy, if the State or IRS voluntarily submits a proof of claim for tax liability to the court, the claim will become part of your bankruptcy.  If your bankruptcy is paying a percentage to unsecured creditors (like credit cards), then it would be beneficial to pay the claim through your bankruptcy plan as it would not increase your overall Chapter 13 plan payment amount.  A portion of each payment is directed towards the taxes and by the end of the plan the taxes are paid in full.

It is unclear that when applying for payment arrangement with the State and/or IRS whether they will choose to set up a separate repayment plan or submit a bankruptcy proof of claim.  Most likely they will default towards setting up a separate repayment plan.

As always, please check with your attorney and let them know what kind of payment arrangement the IRS and State is proposing before making any payments.  We will explore your option of claiming the current tax liability in your existing Chapter 13 bankruptcy plan once we know the IRS and/or State’s course of action.

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