What are the rules for filing a tax return after ch. 7 bankruptcy has been discharged?

Question

My ch. 7 was discharged in January of 2024 and I’ve never been indebted to the IRS. I am an unemployed disabled veteran and I had no income for year 2023. I just found out that, despite being unemployed, veterans in my situation may file a tax return in order to potentially receive some portion of the Child Tax Credit (CTC). My concern is, that I do not want to face any trouble with the IRS or Trustee should I receive some or all of the CTC refund. During the ch. 7 “creditors meeting,” I was asked by the Trustee the reason for not having filed taxes in the past and my answer was - per my bankruptcy attorney’s advice, that I am not legally required to file taxes as a disabled veteran with no income. My only income is non-taxable VA disability. But in light of this new information with regard to the CTC, I don’t want to be in some kind of trouble for filing a tax return after-all. But I could really use any CTC I can get, to catch up on all of this divorce aftermath (late utilities, etc)

Terrence H Thorgaard · Answer

You should ask your bankruptcy attorney to be sure, but you probably wouldn't get in trouble with the IRS or the bankruptcy court.

James L. Arrasmith · Answer

Since your Chapter 7 bankruptcy was discharged in January 2024, you are no longer under the jurisdiction of the bankruptcy court, and your financial situation is separate from the bankruptcy proceedings. Filing a tax return, even if you had no income in 2023, is generally a responsible and recommended action, especially if there's a possibility of receiving the Child Tax Credit (CTC).  
 
Your previous response during the creditors' meeting regarding not being required to file taxes as a disabled veteran was accurate. Veterans who receive non-taxable VA disability benefits typically do not have to file taxes unless they have other taxable income. 
 
You should not face any issues with the IRS or the bankruptcy trustee for filing a tax return to claim the CTC if you meet the eligibility criteria. The CTC is separate from your bankruptcy case, and it is intended to provide financial support to eligible families. To ensure everything is handled correctly, consult with a tax professional or seek assistance from a tax preparation service. They can help you file your tax return accurately, claim the CTC if eligible, and avoid any potential complications. 
 
In summary, filing a tax return to potentially receive the Child Tax Credit is a legitimate action, and it should not impact your Chapter 7 bankruptcy discharge. It's a good opportunity to secure some financial relief, but it's essential to file the return accurately to avoid any future issues. Consider seeking assistance from a tax expert to navigate this process smoothly.

Q: What are the rules for filing a tax return after ch. 7 bankruptcy has been discharged?