Bankruptcy Tuesdays

Last month we talked about tax refunds, when you might have to pay any tax refunds you receive to the trustee, and when you would not have to. This month we’re going to discuss a different aspect of taxes; specifically tax returns that you will have to provide to the trustee. When you file a bankruptcy case, you are required to supply the bankruptcy trustee with copies of your federal and state tax returns for the two most recent tax years. This includes any schedules that you filed with your returns, as well as any W-2s or 1099s. Why, you might ask, would the trustee want a copy of your tax returns? Your tax return can reveal a lot of useful information. It can be used to verify the income information you provide in your bankruptcy schedules. It can indicate how much or why you might be entitled to a refund. It can provide information about prior losses, which can be helpful in a business context. More on bankruptcy and tax returns next week!