Individuals in Chapter 12 or 13 Bankruptcy & Tax Law Information
A separate estate, for tax purposes, is not created for an individual who files a petition under Chapter 12 or 13 of the Bankruptcy Code. You, the individual, should continue to file the same federal income tax return that was filed prior to the bankruptcy petition.
On your return, report all income received during the entire year and deduct all allowable expenses. Do not include any debt canceled (because of bankruptcy) in income on your return. However, you must reduce (to the extent that you have) certain losses, credits or basis in property by the amount of canceled debt. See Debt Cancellation, later.
For information about determining the amount of tax due and paying tax, see Tax Procedures, later.
Note: Interest on trust accounts in Chapter 13 proceedings. If you are an individual debtor in a chapter 13 wage earner’s plan, do not include as income on your return interest earned on amounts held in trust accounts while awaiting distribution to your creditors. This interest is not available either to you or to your creditors. It is available only to the trustees, and is taxable to the trustee as his or her individual income.
Bankruptcy Law Center Contents
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Bankruptcy Law Center
- Automatic Stays Under Bankruptcy Law
- Chapter 7 Bankruptcy Law
- Chapter 13 Bankruptcy Law
- Chapter 11 Bankruptcy Law
- Chapter 12 Bankruptcy Law
- Repeat Bankruptcy Filings & Legal Requirements
- Business Bankruptcy Law
- Emergency Bankruptcy Filings & Legal Requirements
- Involuntary Bankruptcy Filings & Legal Requirements
- Credit Counseling and Debtor Education Courses Legally Required for Bankruptcy
- Joint Bankruptcy Petitions for Married Couples & Legal Implications
- Bankruptcy Exemption Laws
- Collections Laws and Bankruptcy
- Bankruptcy Legal Procedures
- Eviction Legal Issues Related to Bankruptcy
- Foreclosure Legal Issues Related to Bankruptcy
- Lien Avoidance Under Chapter 7 Bankruptcy Law
- Lien Stripping Under Chapter 13 Bankruptcy Law
- How Unemployment Can Legally Affect Filing for Bankruptcy
- Protecting Your Assets During the Bankruptcy Legal Process
- Tax Law Issues Related to Bankruptcy
- Alternatives to Bankruptcy Under the Law
- Bankruptcy Legal Forms
- Elderly People Filing for Bankruptcy & Distinctive Legal Concerns
- Divorce Law Issues Related to Bankruptcy
- Preparing for the Bankruptcy Legal Process
- Employment Discrimination Laws Related to Bankruptcy
- Working With a Bankruptcy Lawyer
- Bankruptcy Law FAQs
- Find a Bankruptcy Lawyer
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