Are Bankruptcy Payments Tax Deductible?
If you're in a Chapter 13 bankruptcy
repayment plan, don't forget to carefully examine your bankruptcy payments for tax deductions. Depending on what is being repaid by the trustee in your Chapter 13 bankruptcy, you may be entitled to deduct some payments from your current taxes. For the purpose of your taxes, payments made by your Bankruptcy trustee will be treated as if you made them yourself.
You Still Have a Right to Claim Those Bankruptcy Tax Deductions
After all, it is you who is paying; but of course through the bankruptcy trustee, so you still have a right to claim those tax deductions you would normally take if you weren't in bankruptcy. For example, if you're paying mortgage interest in Chapter 13 bankruptcy and/or defaulted mortgage payments, those payments may be deductible from your current year's taxes.
If you're paying federal or state taxes, spousal support or business debts/expenses through the Chapter 13 bankruptcy this may also be deductible from your current year's taxes. Speak with your bankruptcy attorney and tax accountant to find out what tax deductions may be available to you during Chapter 13 bankruptcy.
Have Any Questions About Tax Deductions and Bankruptcy?
If you would like to speak to one of our bankruptcy attorneys for a free consultation contact us