Denver Bankruptcy Attorneys - Law Office of Andrew McKenna

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    303-730-8819
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    Contact us today at 303-730-8819, or use our CONTACT PAGE to request your free Telephone Consultation with Andrew F. McKenna, The Bankruptcy Attorney.

  • Income Taxes

    Denver Bankruptcy & Income Taxes

    Taxes are one of the most complex areas when it comes to planning a Colorado bankruptcy. In most cases, tax debt cannot be forgiven. However, you can discharge most income tax debt as long as you did not intentionally avoid filing or purposefully avoided paying your tax obligations.

    Those facing back taxes and other debts can contact the Colorado bankruptcy lawyers at The Law Office of Andrew McKenna for a free and confidential consultation to discuss their rights. Property taxes can be discharged as well – but only if they were due more than a year before your filing date. In most cases, however, a lien may remain on the property for the amount of back taxes. Proper planning can reduce your liability. And eliminating many other types of debt will allow you to focus on satisfying tax debt and putting the Internal Revenue Service in your rear view mirror for good.

    Income Taxes and Bankruptcy in Colorado

    • You may be able to discharge income tax debt if returns were filed at least two years prior to filing for bankruptcy.
    • If the tax debt dates to a return filed at least three years before filing for bankruptcy.
    • You have not been assessed liability for the taxes within 240 days of filing for bankruptcy.
    • You did not attempt to evade your obligation to pay the taxes.

    The issue of income tax and bankruptcy has become more of an issue since the beginning of the economic downturn because debt forgiveness can be charged as taxable income. If you engage in a short sale or your debts are  forgiven by a credit card company, mortgage company, or other creditor, the lender is required by law to issue an IRS 1099-C and the forgiven debt can count as income. In some cases, a Form 982 may be used to show you were insolvent at the time of the forgiveness.

    Denver Bankruptcy and Debt Forgiveness

    The forgiveness of debt can boomerang and become a huge tax liability. What a consumer though was a fresh start can turn into a tax nightmare. Worse still, you cannot later discharge this debt through bankruptcy. Had the consumer first chosen bankruptcy, he or she would have been left without tax debt.

    In some cases, banks are also pursuing homeowners via deficiency judgments – even when the bank agreed to a short sale! A deficiency judgment attempts to collect the difference between a property’s sale price and what is owed on the mortgage. That same amount is what the bank can report as income for federal tax purposes.

    Contact a Colorado Bankruptcy Attorney Today

    If you need bankruptcy assistance in Denver or would like more information, call The Law Office of Andrew McKenna today at 303-730-8819 for a free consultation or contact us online. We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code. Serving clients in Denver and throughout Colorado, including Aurora, Englewood, Lakewood and Boulder.

    Denver Bankruptcy Help – 303-730-8819– Free Consultation

  • ANDREW McKENNA’s CREDENTIALS

    20 Years of Experience
    NACBA Member
    Only represents consumers
    BBB Accredited, A+ Rating

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    North Metro Denver Office – 11154 Huron
    St. Northglenn, CO 80234

    South Metro Denver Office – 3801
    E. Florida, Suite 400, Denver, CO 80222

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