The most dreaded word is BANKRUPTCY!! What if you went through this last year? Does it mean it is so bad that you can't get any benefits? Maybe, it was not your fault?
- Income Tax Refunds CRA will send refunds for the year of bankruptcy and years prior to bankruptcy to your Trustee for the benefit of creditors.
- GST Cheques CRA will automatically send GST cheques to your Trustee while you are in bankruptcy.
- Child Tax Benefit/Universal Child Tax Benefit These will continue to be sent directly to you if you file for bankruptcy.
Filing an income tax return after filing for bankruptcy does not have to be a problem, as long as you know what to watch out for, including when and how to file.
“People that file bankruptcy have to make sure that there are a few things taken care of when it comes to filing their taxes,” said Joshua S. Barger, vice president of tax services at Foundation Financial Group in Jacksonville, Florida.
According to IRS Publication 908, Bankruptcy Tax Guide, the Bankruptcy Code requires a debtor to file an individual tax return, or request an extension. If this does not happen, the bankruptcy case can be converted or dismissed. In addition, the bankruptcy trustee is required to file an estate tax return, form 1041, for the bankruptcy estate.
No matter what time of year it is, April 30 can seem too close for comfort -- especially if you are filing or considering filing for bankruptcy. With a little planning and preparation, you will at least know what to do to minimize your stress.
- Joshua S. Barger, vice president of tax services, Foundation Financial Group