Most people in the U.S. file a tax return each year; however, some people decide not to file even though they need to. If you are considering bankruptcy right now, you will need your recent tax returns to complete the paperwork for it. Your tax returns are vital for your case, and here are a few things you should know about them.
You Need Two Years of Returns to File
No matter which branch of bankruptcy you choose, you will need at least two years of tax returns. You cannot file either type without this requirement. If you did not complete your returns for the last two years, you would need to do so right away. Your tax returns are just one important part of the filing requirements, but there are a lot of others. Some examples of other documents you need are pay stubs, bank statements, and loan documents.
There Are Reasons You Need Them
There are a lot of reasons for needing tax returns with bankruptcy, and one of the primary reasons is to prove your income. It is hard to lie on a tax return. Therefore, a tax return is a good representation of the money you earn. It shows your job title, income, and deductions, and this helps a lawyer learn more about your financial situation.
A second reason you need them is to give the trustee an idea about how much taxes you normally owe at tax time, or the amount of refund you normally receive each year.
It is important to understand that if you file for bankruptcy without providing your tax returns, the trustee will put a hold on your case until you submit them.
The Court May Use Them to Estimate Next Year's Return
One important thing to know about using bankruptcy is the potential to lose your next tax refund. If you normally get a refund from the IRS each year, you probably will not get to keep yours the year after you file. Bankruptcy courts can seize your next return. If they do this, the IRS will not send it to you but will send it to the bankruptcy court instead. You should plan on losing your next return if you file.
Without your tax returns, you cannot file for bankruptcy. If you need help filing them or need advice about bankruptcy, call a law firm today that offers these services.