Are you dreading writing a significantly sized checks to the state and Federal governments soon? Or, perhaps you a excited about the refund you are getting and what you plan to do with it. Either way, here are a couple brief bullet points of things to be aware of if you are also facing a potential bankruptcy:
- Avoid the temptation to NOT file your return. It really just delays the inevitable and there are some time limits that do not start to run until you have filed. If you may need to get a discharge on tax debt in a few years because it is mounting up, filing early and owing the IRS (or Kentucky) is better than waiting so that the debt actually can be discharged later on. If you use an accountant, though, be sure to check with them as well since there may be other considerations.
- Paying a lump sum of over $600 from that refund to any one creditor within 90 days of filing a bankruptcy creates a “preferential payment” that the trustee can go after. So, it may be just throwing money away and making the bankruptcy drag out longer. If that lump sum will actually solve your financial woes, then go for it.