Find tax deductions in Chapter 13 payments
By Cathy Moran, California bankruptcy lawyer on Feb 21, 2008 in Chapter 13 Bankruptcy, General Bankruptcy Information, Tax Issues
Don’t overlook payments your Chapter 13 trustee has made in your case last year when preparing your 2007 tax return. Lurking in the list of creditors being paid by the trustee may well be tax deductions to which you are entitled.
My analysis says that payments the trustee makes as your agent according to a confirmed plan are just as much payments you made as payments for which you actually wrote the check. If the claim is one that would have been deductible to you if you made it, it should be deductible if you pay it via the trustee.
Depending on the facts, the trustee may be paying mortgage interest, if your plan included defaulted mortgage payments; taxes, if there are priority claims; support, if you were behind on spousal support; or business expenses, if a failed business triggered your filing.
Run these ideas by a tax professional. Judge Learned Hand reminds us “there is nothing sinister in so arranging affairs as to keep taxes as low as possible.”
If you liked that post, then try these...
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Preparing Your Chapter 13 Budget--Part Three by Däna Wilkinson, Attorney at Law
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