The United States Bankruptcy Code says that you must file all City, State, and Federal income tax returns required for the four years preceding the filing of your bankruptcy. If you have not filed all city, state, and federal income tax returns for the last four years, the Trustee appointed by the Bankruptcy Court to administer your case will not hold your meeting of creditors. Your meeting of creditors must be held before you can have your debts eliminated in bankruptcy. For more information about your meeting of creditors, see my article entitled, “What to Do at Your Meeting of Creditors.”
Sometimes clients tell me they did not file their income tax returns because they knew they were going to owe money to the taxing authority. Not filing your income tax returns does not mean you do not owe. If you do not file your income tax returns, the taxing authority tends to assess your tax liability at a higher amount than it would have been if you had filed your income tax return. This is because the taxing authority does not take into account the tax credits and tax deductions which you could have taken on your income tax return. So even if you cannot pay your tax liability right away, you may be able to lower your tax liability by simply filing the return.
Another reason clients tell me they have not filed their income tax returns is because they cannot afford to pay a tax preparer at this time. The cost of hiring a tax preparer can be prohibitive for some people, particularly if they have multiple tax years to file for. It may not be your favorite thing to do, but most people can prepare an income tax return in about one hour. If cost is an issue for you because you cannot afford to pay a tax preparer $200, preparing your income tax return is like having a $200 an hour job for one hour.
The federal forms and filing instruction booklets for tax years 2017 and 2018 are available at www.irs.gov/forms-instructions. The federal forms for tax years 2015 and 2016 are available at www.irs.gov/forms-pubs-prior-search?search=2015+1040. The filing instructions for tax year 2015 is available at www.irs.gov/pub/irs-prior/i1040gi--2015.pdf. The filing instructions for tax year 2016 is available at www.irs.gov/pub/irs-prior/i1040gi--2016.pdf.
The state forms and filing instruction booklets for multiple tax years are available at www.michigan.gov/taxes/0,1607,7-238-44143---,00.html. There are 24 cities in the State of Michigan which charge city income taxes: Albion, Battle Creek, Benton Harbor, Big Rapids, Detroit, East Lansing, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield, and Walker. The city income tax forms and filing instructions for these cities can be found at www.michigan.gov/taxes/0,4676,7-238-44143-287984--,00.html.
Another roadblock to filing your income tax returns can be if you no longer have a copy of your W-2 for that tax year. This is most likely to be the case when you have unfiled tax returns for multiple years. You can obtain a copy of your W-2’s for multiple tax years by calling the Taxpayer Appointment Hotline for IRS Field Office at 844-545-5640. When you call that toll-free number, you have several options for getting a copy of your W-2’s. You can have the W-2’s mailed to you. You can have the W-2’s faxed to you, as long as the fax number is for a fax machine you are at so you can receive the fax directly. You can also schedule an appointment to go to the IRS field office nearest you in order to pick up your W-2’s.
Although the United States Bankruptcy Code says you must file all City, State, and Federal income tax returns required for the four years preceding the filing of your bankruptcy, your income may have been low enough that you were not required to file a return for a particular tax year or years. If your total gross income is lower than the amount of the standard deduction for that tax year, you are generally not required to file an income tax return for that year. For tax years 2015 through 2018 the standard deduction amount is listed on the left-hand side of page two of form 1040, toward the top of the page. When your income for a particular tax year or years was low enough that you were not required to file a return, you can file an affidavit to the Bankruptcy Court which states this.
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department
The Law Offices of Joumana Kayrouz, PLLC