Can Irs Form 13844 Bankruptcy 2025

Hello, my name is Matthew Cherney, attorney and owner of Cherney Law Firm in Marietta, Georgia. Every year at tax time, it seems I receive the same question: Will my income tax refund be affected by filing bankruptcy? The answer to this question is going to depend on four main things. First, the amount of your income tax refund. Second, when you received your income tax refund. Third, the extent of value of your other property. And fourth, which bankruptcy you're filing. Let's first examine income tax refunds in a Chapter 13 bankruptcy. If you receive your refund prior to filing Chapter 13 and you've spent that refund, a bankruptcy trustee will most certainly inquire as to how those funds were spent. Depending on how those funds were spent, you may be required to pay that money back to your creditors in your Chapter 13 plan. If you have not spent the refund and it's in the form of cash or in your bank account, it will be treated as an asset and subject to your state's exemption laws. This is when the value of your other property becomes critical. You are only able to exempt property up to a certain amount. To the extent that your property cannot be exempted, you may be required to pay that money back to your creditors in your Chapter 13 plan. If you receive an income tax refund while you're in Chapter 13, nearly all Chapter 13 plans require that at least a portion of that refund be paid to your Chapter 13 plan. Now, let's examine income tax refunds in a Chapter 7 bankruptcy, keeping in mind some of those same rules. If you receive your refund prior to filing Chapter 7 and you've spent that refund, a bankruptcy trustee will most...