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Taxes Owed from Day One of New Year

By Cathy Moran, Esq. Filed Under: Means test, Tax

April 15th is so ingrained in our thinking as Tax Day that it’s easy to forget that the tax for the previous year is owed on the first day of the next tax year.

Payment isn’t due til April 15th, but the obligation exists before the return and payment are due.

Why is this important for bankruptcy lawyers?  The tax debt, even if payment isn’t yet due, is a debt for purposes of the means test priority debt line after Dec. 31.  For the over median income filer, it is one more allowable deduction from income.

If the return hasn’t yet been filed, you can either prompt the client to get it done ASAP, or estimate the unpaid portion of the last year’s tax.

Consider as well if last year’s withholding was less than the actual debt, is the current withholding sufficient to equal the tax burden of the current tax year?

More

Tax deduction in the means test

Taxes and when they are dischargeable.

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Filed Under: Means test, Tax Tagged With: bankruptcy claim, learn bankruptcy law, means test

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