This is another case of waiting until the last moment to file a bankruptcy which was inevitable. Many debtors who get sued by their creditors, never respond to the summons, receive a default judgment and within a few days, weeks or even months, their bank account is emptied or their wages are garnished. That’s when they come to file bankruptcy and want to know if they can get their money back. Well, the answer to that particular bankruptcy question is maybe yes; but it’s going to take a little time.

If your bank account or wages are garnished and you file for bankruptcy within 90 days, you might be able to get that money back within 3 months; but only if the money is considered exempt under bankruptcy law. For example, social security payments or child support payments are just a few types of income that are exempt from seizure by creditors in a bankruptcy.

If you are considering filing for bankruptcy and are currently experiencing wage or bank account garnishments, do not delay. There is a small window of opportunity to act and possibly retrieve money taken by creditors through garnishments.

The Mortgage Forgiveness Debt Relief Act of 2007 was suppose to prevent homeowners who experienced foreclosure from receiving a huge tax bill on forgiven debt caused by the foreclosure. But to many homeowners’ surprise the law doesn’t protect all homeowners who have lost their property to foreclosure. Under the Mortgage Forgiveness Debt Relief Act, the tax liability incurred from the foreclosure will be waived only if the debt was accrued from buying or improving the property. Sounds simple enough, right? Not so fast. Remember all of those home equity loans and refinances that required homeowners to roll their credit card debt into their mortgage? Well, that is taxable. So if you refinanced your $100,000 home for $140,000 and rolled $20,000 of credit card debt into the refinance, after your home is foreclosed on you will still owe taxes on that $20,000. For those homeowners who have suffered from foreclosure, paying any type of tax is a huge blow, especially on a home they no longer own. The only way that a foreclosed homeowner can avoid this tax liability is to file for bankruptcy. But the law states that the taxpayer must be insolvent at the time of the foreclosure or the foreclosure must occur after or during the bankruptcy in order to have the tax waived. That means if a debtor has retirement funds or any other assets at the time of the bankruptcy, they might still be stuck with the tax debt caused by the foreclosure.

Yes, the bankruptcy law can be hard on a debtor who owes Uncle Sam taxes. But did you know that it may be possible for you to discharge some taxes during bankruptcy and/or repay taxes under a Chapter 13 repayment plan? The first thing every debtor needs to know is that you MUST file income tax returns, even if you owe money and can’t repay the tax debt immediately. The bankruptcy law may allow a debtor to discharge tax debt that is older than 3 years during a Chapter 7 bankruptcy. Even if a debtor is not able to discharge taxes during bankruptcy they can often negotiate a "settlement" that allows the debtor to repay a lump sum figure that is significantly less than the original tax debt owed.

If your taxes are making it difficult to pay for basics such as housing, food and transportation you may be able to setup a repayment plan during a Chapter 13 bankruptcy that is reasonable and within your financial means.

Whatever you do, do not ignore tax debt. Tax collectors have an incredible amount of power to seize bank accounts, wages and other assets with little or no notice beforehand. No matter how large your tax debt is or how delinquent you are in repaying them, speak with a bankruptcy attorney to find out how you can get control of your tax problem using bankruptcy.

It’s December and that means that tax time is just around the corner. But for those of us who are prone to procrastination when it comes to paying Uncle Sam, the Dallas Morning News offers a few great tax tips for saving money now, just in time for Xmas. Here’s a few of the tax tips you may need.

1. Get All Of Your Tax Paperwork Organized Now. That means receipts and proof of your right to take certain tax deductions.
2. Tell Your Employer To Hold The Check. If you’re expecting to receive a job bonus, ask your employer to wait until January to cut that check. Or, if you’re self-employed send those December invoices late, just late enough to miss December 31 st and the 2008 tax year.
3. Don’t Be A Scrooge. Increase your tax deductions by making year-end donations of money, books, furniture or anything else that is tax deductible to a non-profit organization.
4. Pay Next Year’s Bills Today. Increase your tax deductions by prepaying some 2009 bills like a mortgage, property taxes or student loans before the December 31 st tax deadline.
5. Save For The Future. Maximize your retirement contributions to IRAs and Roth IRAs and decrease the taxes you will owe.

Millions of Americans are losing hundreds of dollars a every tax year by not taking a closer look at what they can deduct from their taxes. According to Money Central the average American taxpayer is giving Uncle Sam an estimated extra $438 a year when filing taxes. With today’s economy $438 is a lot of money going to taxes voluntarily. But because many American taxpayers are Do-It-Yourselfers when it comes to filing their taxes, many just simply use the standard deduction because they want to play it safe with the tax man. But using the standard deduction for your taxes is not safe, it is risky businesses, especially if you end up owing Uncle Sam money. Millions of Americans are now facing tax debts that may have been eliminated if they had worked with a professional to maximize their tax deductions and minimize the amount of taxes they are required to pay. Also, remember that if you are facing overwhelming tax debt, that tax debt may be eligible to be repaid through a Chapter 13 bankruptcy. Talk to your bankruptcy attorney to find out how you can reorganize your tax debt.

Many legal residents hoping to secure a green card or citizenship face many financial difficulties, but are apprehensive about filing for bankruptcy because they fear it may hurt their immigration process. The good news is that there is no immigration law, statute, or regulation that states that if you file for bankruptcy you cannot become a naturalized citizen or apply for a green card. Not only that, but Form N400 the Application for Naturalization doesn’t even ask applicants about bankruptcy. The only question asked that’s related to debts is if you failed to file a tax return which doesn’t necessarily have anything to do with bankruptcy. Also, remember that just because a person files for bankruptcy doesn’t mean that they failed to pay taxes or failed to file a tax return. If you are filing for bankruptcy and plan to apply for citizenship in the United States within five years, speak with your Dallas Fort Worth attorney first.

1. Write Off Property Sale Losses

If you experienced a foreclosure, deed-in-lieu of sale, mortgage-loan modification or a short sale and had debt forgiven, you need to know that the Mortgage Forgiveness Debt Relief Act of 2007 will treat any forgiven debt as taxable income. But in an effort to aid people during the credit crisis, Congress allowed homeowners with mortgage debt forgiven in 2007, 2008 and 2009 to avoid this tax.

2. Write-Off Losses From Selling Stock

If you experience a financial loss this year from selling stocks or other property you can use the loss to offset capital gains from other property or stock sales. Losses exceed capital gains? You can apply as much as $3,000 of the additional losses toward ordinary income. Any amount above $3,000 can be placed on future tax returns.

3. Write-Off Work Related Expenses

There are many expenses employees incur that are not covered by their employer. You can deduct these excess expenses on your tax return if they exceed more than 2% of your income.

4. Write-Off Business Equipment

If you have a business, you can write off the cost or depreciation of certain business purchases, such as business furniture, machinery, office equipment and laptops.

If you owe taxes and despite having received Letter 1058 – Final Notice of Intent to Levy and you have not request for a Collection Due Process Hearing with 30 days from the date of Letter 1058, the IRS can levy your bank account, wages and other assets to collect back taxes.

If your bank account is levied by the IRS, your bank will have to pay to IRS whatever money is in your account on the date the levy is received by your bank. You have 21 days to get the levy released. If you do not take action, you bank will send the money in your account to the IRS which will be used to clear your tax dues. If your dues are still not cleared, the IRS can issue a new bank levy. When the IRS levies your bank account, the levy is only for the particular day the levy is received by your bank. The bank is required to remove whatever amount is available in your account that day up to the amount of the IRS’s levy and send it to the IRS in 21 days. The levy does not affect any future deposits made into your account unless the IRS issues another levy.

If the IRS levies your wages, the levy is served on your employer. Your employer will be required to pay over a large portion of your paycheck to the IRS till your tax debt is cleared. The IRS does not take all of your paycheck; they allow you enough to live on - the standard deduction amount and personal exemption amount based upon your filing status and number of dependents. The levy on your wages will only end when the IRS releases the levy.

The levy will end when (a) the levy is released (b) You pay off your tax debts or (c) the statute of limitation prevents the collection of tax

You can appeal against the action of the IRS after the levy under the Collection Appeals Program. The IRS normally suspends collection action during the appeal. If your appeal is successful, the levy will be released.

A foreclosure could subject you to tax liability. Never overlook this aspect of foreclosure. The tax rules are complex, and subject to interpretation. The Internal Revenue Service will treat a foreclosure as a sale and you will receive a Form 1099C for the amount your lender or a third party bids at the foreclosure sale. You could end up with a tax liability if you have realized gain from the sale. The rules are complex and you should consult a specialist. Many in foreclosure do not realize that that may have to pay tax on a house that they lose through foreclosure.

Even if your home is not sold in foreclosure, but you give your lender a deed in lieu of foreclosure, you could still be subject to tax liability. This is because the deed in lieu of foreclosure results in debt forgiveness. There could be ways for you to minimize or eliminate such tax liability by careful planning with the help of a qualified tax professional.

To calculate the debt cancelled for tax purposes, you must subtract the fair market value of the property from Form 1099-C, box 7 from the total amount of the debt immediately prior to the foreclosure.

To calculate the gain from foreclosure, subtract the adjusted basis in the property – usually the purchase price plus the cost of any major improvements from the fair market value of the property foreclosed.

If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income.  If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount in your returns. Losses from the sale or foreclosure of your home are not deductible.