Should I Inform My Tax Preparer About My Bankruptcy Case?

If you're considering bankruptcy, you may wonder if you need to tell your tax preparer. The answer is maybe. It depends on the type of bankruptcy case you file and how it will affect your taxes.

If you file a Chapter 7 bankruptcy, also known as a straight bankruptcy, your tax preparer will need to know. That's because the IRS requires bankrupt taxpayers to list all of their creditors, including the IRS, on their bankruptcy schedules.

However, if you file a Chapter 13 bankruptcy, also known as a wage earner's plan, your tax preparer may not need to know. That's because the IRS is not listed as a creditor in most Chapter 13 cases.

Of course, it's always best to err on the side of caution and disclose any information that could affect your taxes.

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