When you file for bankruptcy in Florida you need to list all of your assets and all of your debts. One asset people tend to forget is their tax return. Your tax return is an asset and should be listed on your bankruptcy schedule. If you have yet to file you should list the tax return as an asset with amount unknown. If you filed and you owe taxes then you don’t need to list the tax return as an asset.
So if you are going to be receiving an a refund then you must protect the asset through exemptions.
Part of your tax return is excluded and exempted automatically:
Any part of your tax return that is for Earned Income Credit (children) is exempted, however anything else is subject to the bankruptcy estate and could be lost in the bankruptcy.
How to keep your tax return:
The best way to keep your tax return is to do your taxes, file them, obtain the refund, spend the money (on certain items), and THEN FILE FOR BANKRUPTCY.
Here is a non-exclusive list of items that you can spend the tax refund on prior to the filing of your bankruptcy:
- Attorney fees
- Utility Bills
- Medical and Dental Expenses
- Car Payments
Things NOT to spend the tax return on:
- Paying back a friend or family member for a loan
- Luxury goods (electronics, jewelry, trips)
If you are thinking of filing for bankruptcy and would like to speak with a Florida bankruptcy lawyer then please contact Shmucher Law, PL at 954.309.5559 or 305.741-5553. We offer free consultations in Boca Raton, Fort Lauderdale, Miami, Plantation and Sunrise Florida.