Indiana bankruptcy attorney, John Bymaster, discusses 1099s and bankruptcy. This time of year some of our Indiana bankruptcy clients received 1099s in the mail and they call our office because they are not sure what to do. This bankruptcy informational video will provide you with information on how to move forward with your taxes after filing bankruptcy.
A lot of clients are worried when they receive a 1099 in the mail after bankruptcy, because they think they have to pay some kind of tax on the debt that was discharged in bankruptcy. This is a common misconception. When you receive a 1099 in the mail after you file bankruptcy, you do not have to pay tax on the debt that was discharged.
There are a couple rare circumstances where someone would have to pay taxes. The first circumstance would be if you took a depreciation schedule on a property that you later discharged in bankruptcy, then it may result in a situation where you have to pay some of those depreciation taxes back. The second circumstance is if you settled a debt before you file bankruptcy and then you file bankruptcy later, it is possible that you may have to pay taxes on that.
If you have further questions on 1099 and bankruptcy, we always advise that you talk to a certified public accountant. You can also contact an Indianapolis bankruptcy attorney about 1099’s and bankruptcy.
-Indiana Bankruptcy Attorney John F. Bymaster