According to the IRS Publication, Bankruptcy Tax Guide, the Bankruptcy Code requires that debtors file an individual tax return, or that they request an extension.

If the debtor fails to do this, the bankruptcy case can be converted or dismissed. Additionally, the bankruptcy trustee must file Form 1041, which is an estate tax return for the bankruptcy estate.

If April 15 seems like it's too close and you're considering filing for bankruptcy, by taking the time to speak with a qualified bankruptcy attorney, you can minimize your stress.

One of the common mistakes made by taxpayers who file for bankruptcy, or who are in the process is they file their tax return the same as usual. This is not how it should be handled.

Filing Taxes Differently During Bankruptcy

As a Chapter 7 debtor, you file your usual 1040 the same way that you would any other tax year. The bankruptcy trustee has nothing to do with it since it's not a debt, instead it's your obligation to file the paperwork with the federal government. The trustee does however, file a Form 1041 for the bankruptcy estate.

On the other hand, if you're filing Chapter 11, you remain in control of the assets and act as the bankruptcy trustee. In the case, the debtor is responsible for filing the individual 1040 return and the 1041 bankruptcy estate return.

With Chapter 7 and Chapter 11, there has to be two tax returns filed for the current tax year: the Form 1040 and the Form 1041. When the individual acts as the bankruptcy filer and the trustee, they tend to miss this.

Though Chapter 11 is more often filed by corporations, not individuals, it's still important that individual debtors know about these two separate filings.

With a Chapter 13, the debtor must file timely taxes and supply the trustee with the returns, and use all refunds to pay off creditors. As with a Chapter 7, the trustee files the Form 1041.