Q: I know I'm going to have a high tax bill this year - does declaring bankruptcy allow me to not pay it?
A: Unfortunately, income taxes need to be at least 3 years old before they become dischargeable in bankruptcy. However, your tax debt will be considered a priority claim, so any assets liquidated in a Chapter 7 bankruptcy will go to pay the taxes ahead of most other creditors. If you file a Chapter 13 case, you will need to pay these taxes through the Chapter 13 plan.
A: Income taxes can be discharged in bankruptcy, but they must be due more than three years ago, returns filed for at least two years and assessed for at least 240 days. Newer taxes are not dischargeable, but can be paid over 5 years in a Chapter 13 with no additional penalties or interest.
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