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Will I Still Get My Tax Refund If I File For Chapter 7?

Todays Date: January 19, 2019

In cases where you may be expecting a tax refund, that revenue could quite possibly be converted into property belonging to the bankruptcy estate. On the other hand, there are many ways to shield a person’s refund if you are anticipating one.

First of all, the money that the government owes you for a tax refund may be claimed as exempt property. Illinois has opted out from the country wide bankruptcy exemptions and uses rather its own exemptions. The particular Illinois law grants a “wildcard” exemption of up to $4,000 total for any personal property except wages. In the event that you lack other personal property for which you would likely prefer to claim as exempt, or maybe if that property’s worth might be under $4,000, one’s refund may be exempted according to the “wildcard” exemption.

Secondly, you can actually apply your reimbursement toward next year’s taxes. When you file your return, one might choose to use tax overpayments for your tax liability for a year later. Should you make this particular decision, you cannot change your mind – it is an irrevocable election. Since you are unable to revoke the election to apply your repayment for the next year’s taxes, then you no longer possess any right to a refund. As you would no longer possess a right to a refund, you don’t have property interest to end up being part of the bankruptcy estate.

Additionally you can prevent your refund from becoming property of the bankruptcy estate just by waiting to file till once you collect your refund. Once you’ve gotten your tax refund, you most probably could devote this money on your attorney’s fees or consumable necessities. These are proper purchases to spend your tax refund money on.

It’s significant to note that tax credits could be kept out of the bankruptcy estate for various good reasons as well. One argument is that the right to a tax credit cannot be determined before the end of the tax year. If your right to a credit has not established, there isn’t any interest in the credit that could become the property of the bankruptcy estate. Assuming you have not filed your tax return yet, an argument might be made that there is no interest in the credit as well. Furthermore, the earned income tax credit could very well be eligible for exemption as a public assistance benefit.

John Kunes works hard to become the bankruptcy lawyer Chicago can count on. Find answers to all of your questions about bankruptcy in Chicago at John’s bankruptcy blog, ChicagolandBankruptcyHelp.com.

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